rafmacalaba/datause-encoder-data huggingface dataset:
INFRASTRUCTURE AND GROWTH IN AFRICA

# **Table 1. Aggregating infrastructure variables: principal components analysis**

|_(first eigenvector, correlation)_||**Aggregat**<br>|**e infrastructure in**<br>|**dices**<br>||
|---|---|---|---|---|---|
|**Variable**|**Stock**<br>**[IK1]**|**Stock**<br>**[IK2]**|**Stock**<br>**[IK1a]**|**Stock**<br>**[IK2a]**|**Quality of**<br>**services**|
|_I. Stocks_||||||
|Telephone main lines and mobile phones|0.603|..|0.614|..|..|
|_(per 100 workers)_|(0.943)||(0.949)|||
|Telephone main lines|..|0.606|..|0.616|..|
|_(per 100 workers)_||(0.935)||(0.957)||
|Electricity-generating capacity|0.613|0.614|0.606|0.606|..|
|_(in megawatts per 1,000 workers)_|(0.956)|(0.950)|(0.936)|(0.941)||
|Total roads - arable land|0.510|0.506|..|..|..|
|_(in km. per sq. km. of arable land)_|(0.788)|(0.791)||||
|Total roads|..|..|0.506|0.503|..|
|_(in km. per sq. km. of surface area)_|||(0.783)|(0.781)||
|_II. Quality of infrastructure services_||||||
|Telecommunications|..|..|..|..|0.608|
|_(based on waiting time for installation)_|||||(0.813)|
|Electricity|..|..|..|..|0.559|
|_(based on energy losses)_|||||(0.746)|
|Roads|..|..|..|..|0.564|
|_(based on paved roads)_|||||(0.754)|
|Eigenvalue|2.39|2.41|2.40|2.42|1.79|
|Variance Proportion|79.6%|80.4%|80.1%|80.8%|59.5%|

_Note: We report the first eigenvector resulting from the principal component analysis of infrastructure proxies in telecommunications, electricity, and roads. For instance, the first aggregate index [IK1] is obtained using the following formula: IK1 = 0.603*K1 + 0.613*K2 + 0.510*K3, where K1, K2 and K3 represent (standardized) physical measures of infrastructure stocks in telecommunications, electricity, and roads. In addition, the numbers in parentheses (below the different eigenvectors) represent the correlation of the first principal component with the corresponding infrastructure variable._ 44
In other words, the modest objective of this discussion paper is to provide a summary of the terms of the debate on what remains a controversial subject and to examine how the underlying motivating forces driving the debate can be addressed in a constructive way.

# **II.** **<u>TRADITIONAL CONCEPT AND CATEGORIES OF ODIOUS DEBTS</u>**

In its initial use, the expression “odious debts” identified those debts that a state or a government had contracted with a view to attaining objectives that were prejudicial to the major interests of the successor state or government or of the local population. The debts thus identified are those contracted with an international legal subject (a state) under legal agreements governed by international law.<sup>2</sup> The issue of the existence of an international legal doctrine on odious debts can arise within the context of litigation both before international courts and arbitral tribunals and before national courts.<sup>3</sup> With respect to financial agreements governed by a national legal system, the question (which will not be addressed in this paper) is whether a national, as opposed to an international, doctrine on odious debts exists.<sup>4</sup>

> 2 A debt contracted by a state with a non-sovereign may give rise to an international claim through diplomatic protection, but this possibility will not be examined here.

> 3 For this latter case, see, for example, the reference to the fact that “the [People’s Republic of China] asserted as a long-established principle of international law that ‘odious’ debts are not to be succeeded to... a view they continue to advance, but do not explicitly rely on, in making this motion to dismiss” in _Marvin L. Morris, Jr., Plaintiff, against The People’s Republic of China, et al., Defendants. Gloria Bolanos Pons, et al., Plaintiffs, against The People’s Republic of China, et al., Defendants_ , United States District Court for the Southern District of New York, 478 F. Supp. 2d 561; 2007 U.S. Dist. LEXIS 20784 (March 21, 2007, decided).

> 4 Ashfaq Khalfan has written that, at present, “it is unclear whether the laws of England and of New York, properly interpreted, provide support for the ‘odious’ debt doctrine. Given the interest of these jurisdictions in maintaining their positions as key financial centers, their courts are likely to reject the ‘odious’ debt doctrine.” (Sites and Strategic Legal Options for Addressing Illegitimate Debt, _Advancing the “odious” Debt Doctrine [CISDL working paper]_ , 71.) While an argument based on the doctrine of odious

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# APPKDII A

# THE courxus TAIB **MODEL**

Using the traditional continuous time option pricing method it can be shown that if the price of the comodity bundle P and the value of the firm V follow stochastic processes: dP . p dt + a d Sp dV g dt + a d iv **V V** and dBp div apv dt the differential equation to be solved is a 2 p2 B + 2 a2 V2 B + a PV B I20, pp 2 v vv pv pv + PB (r - 6) + B Jr V - DI - B - rB + C O p B is the value of the bond.

Z is the time to expiration. 6 is the convenience yield. D is the total payout by firm per year.

C is the yearly coupon attached to the bond.

The boundary conditions are: B (P,V,O) = min [V, F + max 10, P - El]

# where P is the face value of the bond.

If we assume the payout D is a fixed fraction d of the firm value V and the coupon C is a fixed fraction c of the face value of the bond, we have to check for default every time the coupon is paid.

# i.e., V a C

The solution to this equation (if at all possible) would be very cumbersome even by most numerical ethods.
households who could lend up to JD 150 to fellow refugees, and the share of refugees living under the Jordanian national 2010 abject poverty line (JD 336 per individual per year) .

The ability to lend to fellow refugees depicts the households' level of savings and their social capabilities, which are essential QOL elements. Households below the national abject poverty line are considered to be at risk of experiencing deprivations in food poverty and other basic needs. Asset accumulation is calculated by aggregating the essential household assets (excluding business assets) that refugee households owns.<sup>6</sup> Access to service measures the refugees' satisfaction with overall access to water, sewerage, garbage disposal, and electricity. The risk of overcrowding is measured by calculating the number of rooms a household has per adult equivalent. The result of the unmatched differences between in-camp and out-of-camp refugees is shown in the upper side of Table 1. Note that this result _does not_ imply the real impacts, as it does not control for baseline and time-variant differences.

_Figure 1: Assessment of overall subjective experience of life for in-camp, out-of-camp refugees, and the host population_ <!-- Start of picture text --> 10<br>9<br>8<br>7<br>6<br>5<br>4<br>3<br>2<br>1<br>0<br>2005 2010 2011 2012 2013 2014 2015 2016 2017 2020<br>Camp refugee Out-of-camp refugee Host population<br><!-- End of picture text -->

> 6 We aggregated 17 assets from the survey including air conditioners, microwaves, laptops, cars, motorcycles, washing machines, water heating system, refrigerators, burners, radio, tvs, DVD recorder, cable receivers, cable subscriptions, camera, cell phones, and home heating systems.

15
Bouguen, Adrien, Yue Huang, Michael Kremer and Edward Miguel (2019) “Using Randomized Controlled Trials to Estimate Long-Run Impacts in Development Economics”, _Annual Review of Economics_ 11: 523-61.

Brudevold-Newman, Andrew, Maddalena Honorati, Gerald Ipapa, Pamela Jakiela, and Owen Ozier (2024) “A Firm of One’s Own: Experimental Evidence on Credit Constraints and Occupational Choice”, _Review of Economics and Statistics_ , forthcoming.

Campos Francisco, Michael Frese, Markus Goldstein, Leonardo Iacovone, Hilary C Johnson, David McKenzie and Mona Mensmann (2018) “Is Personal Initiative Training a Substitute or Complement to the Existing Human Capital of Women? Results from a Randomized Trial in Togo”, _AEA Papers and Proceedings_ 108: 256-61.

Campos Francisco, Michael Frese, Markus Goldstein, Leonardo Iacovone, Hilary C Johnson, David McKenzie and Mona Mensmann (2017), “Teaching Personal Initiative beats Traditional Training in Boosting Small Business in West Africa”, _Science_ , 357(6357): 1287-1290.

Chen, Jiafeng and Jonathan Roth (2024) “Logs with Zeros? Some Problems and Solutions”, _Quarterly Journal of Economics_ 139(2): 891-936.

Chioda, Laura, David Contreras-Loya, Paul Gertler and Dana Carvey (2023) “Making Entrepreneurs: The Return to Training Youth in Hard Versus Soft Skills”, Mimeo. UC Berkeley.

de Mel, Suresh, David McKenzie, and Christopher Woodruff (2009) “Are Women More Credit Constrained? Experimental Evidence on Gender and Microenterprise Returns”, _American Economic Journal: Applied Economics_ 1(3): 1-32.

de Mel, Suresh, David McKenzie, and Christopher Woodruff (2012) “One-Time Transfers of Cash or Capital Have Long-Lasting Effects on Microenterprises in Sri Lanka.” _Science_ 335 (6071): 962– 66.

Egger, Dennis, Tilman Graff, Edward Miguel, Felix Soliman, Nachiket Shah and Michael Walker (2024) “Slack and Economic Development”, Mimeo.

Frese, Michael (2024) “Learning from African Entrepreneurship: On the Psychological Function of Entrepreneurial Preparedness”, Mimeo.

Frese, Michael and Doris Fay (2001) “Personal Initiative: An active performance concept for work in the 21<sup>st</sup> Century”, _Research in Organizational Behavior_ 23: 133-187.

Friedson-Ridenour, Sophia and Rachael Pierotti (2019) “Competing priorities: Women’s microenterprises and household relationships”, _World Development_ 121: 53-62.

Ghanem, Dalia, Sarojini Hirshleifer, and Karen Ortiz-Beccera (2023) “Testing Attrition Bias in Field Experiments”, _Journal of Human Resources_ forthcoming.

Hardy, Morgan and Gisella Kagy (2020) “It’s Getting Crowded in Here: Experimental Evidence of Demand Constraints in the Gender Profit Gap”, _The Economic Journal,_ 130(631): 2272-90.

17
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# **1. Introduction**

Studies find that competition that formal or registered firms face from informal or unregistered firms (henceforth, informal competition) affects formal firms’ functioning and performance in terms of employment growth (Amin 2023), access to finance (Distinguin et al. 2016), innovation (Mendi and Costamagna 2017, Amin 2024), and total factor productivity (Wen et al. 2021). This body of work is still in its infancy, and several important issues remain unexplored. The present paper attempts to fill this gap in the literature by analyzing how informal competition impacts the proclivity to acquire internationally recognized quality certificates by formal manufacturing small and medium enterprises (SMEs) in the Latin America and Caribbean (LAC) region. The results show that this impact is positive and consistent with the “legalist” view of informality, much stronger in countries that have weaker rule of law and more burdensome business regulations. Our findings have important policy implications that are discussed.

An important motivation for focusing on informal competition is the large size of the informal sector in the developing world (see Loayza 2016, ILO 2018). For instance, on average, for the 16 LAC countries included in this study, an estimated 61 percent of total employment and 34 percent of gross domestic product (GDP) originate in the informal sector.<sup>1</sup> Thus, the informal sector can exert a large impact on the growth and development of the formal private sector through, for example, providing competition to the formal sector firms. Competition is generally considered beneficial for economic efficiency and economic development (see Nickell 1996, Van Reenen 2011, and Backus 2020). However, the literature largely ignores the potential of informal

> 1 The estimates are averages over 2015-2020. For Nicaragua, the employment figure is not available. The estimates are based on the World Bank’s Informal Economy Database and compiled by Elgin et al. (2021). Available at <u>https://www.worldbank.org/en/research/brief/informal-economy-database</u>

2
# <u>Trade, local livelihood choices and environmental consequences</u>

As mentioned, the case studies feature uncommon ecologies that support diverse habitats. As the case study authors emphasize, these same ecologies, in combination with a variety of factors, including markets for traded goods, give rise to local livelihoods. Importantly, the case studies find that it is the interaction between the local ecology and livelihood choices that largely determines how broad changes in trade or other policies translate into a given set of outcomes for vulnerable ecologies and households. Said differently, trade events shape poverty and environmental outcomes by influencing production decisions and livelihood choices.

In particular, as suggested in the previous section, many households that live in close proximity to important ecologies craft livelihoods by drawing on the same resources that support valuable habitats and other local environmental services. They do so in combination with other private and public assets, such as household labor, capital and public infrastructure. Because households differ in their range of accessible assets, different livelihood strategies and different production choices will emerge, even in the same community. In turn, different livelihood choices will have different consequences for income and will also place differing demands on local ecologies.

A good example is found in the Vietnam study, alluded to above. The authors point out that a variety of farming methods are used to raise shrimp in Ca Mau, but note that many poor farmers, who lack the capital to build shrimp ponds, choose an extensive farming method that relies partly on food sources and tidal flows provided by local estuaries. In contrast, many wealthier farmers with better access to credit employ more input-intensive production methods that are also more profitable. Just as each approach has different economic consequences, each approach places different strains on the local ecology. For example, the extensive systems operate using open sluices and shared water systems. Consequently, pollution sources, while generally low, are shared among all producers and local estuaries. The same is true of disease, and so the risk of epidemic is high. In contrast, more intensive production systems provide better contamination controls but also employ higher chemical concentrations that can spill into local estuaries. Moreover, pond sludge accumulates more quickly when intensive methods are used, resulting in problems related to blocked drainage systems and higher levels of water pollution.

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statistical findings are often country-specific and dependent on the type of proxy used to measure financial development. In one of the few recent studies of sub-Saharan Africa Atindehou et al. (2005) found no effect of financial intermediation on economic development, attributing their finding to the prevalence of the informal sector in those countries.

**Table 9**

|In|dices of f|inancial refo<br>|rms<br>||
|---|---|---|---|---|
|Period|TFP|M2/GDP|Priv.Cr./GDP|Real Int.|
|1980-89|-2.37|14.36|7.2|9.13|
|1995-03|7.78|16.32|9.2|8.5*|
|* 2003|||||

Considering next the currency regime, it is important to note that in 1995 Rwanda established a fully liberalized and market-determined exchange rate system. The shift from a fixed exchange rate to a flexible exchange rate coincides with the period when productivity became positive, yet the real exchange rate<sup>18</sup> declined between the two periods from an average (index value) of 102.3 during 1980-1989 to 93.9 during 19952003. Policy was aimed at stabilizing and reducing the exchange rate through forex auctions so as to maintain the external competitiveness of the country’s exports. The stability was supported by a continuous flow of foreign financial assistance. Official Development Assistance (ODA) as a share of GDP rose sharply from 10.8 percent during the 1989-89 period to 23.7 percent during the 1995-2003 period.

22
||**DOMAIN**||**INDICATOR OF FORMS OF EMP**|**OWERMENT**|
|---|---|---|---|---|
||**Sub-domain**|**National**|**Intermediary**|**Local**|
|**Society**|**Family**|•Score of civil society<br>advocacy activity for<br>legislation addressing<br>informal patriarchal rules|•Score of community advocacy<br>activity addressing informal<br>patriarchal rules<br>•Score of civil society monitoring<br>activity of unequal household<br>relations|•Score for distribution of HH decision making<br>power (4.67)<br>•Score of individual’s decision making autonomy<br>(4.68)<br>•Score of control over one’s body (4.69)<br>•Score of individual mobility (4.70)<br>•Score of individual access to basic services (4.71-<br>4.72)<br>•Score of comparative household expenditure on<br>healthcare per individual HH member (4.73-4.74)|
||**Community**|•No. of national networks/<br>alliances of community<br>organizations<br>•Diversity of community based<br>organizations|•Score of inter-community<br>networking activity<br>•Score of authority over local<br>policy process<br>•Score of authority over local<br>budgets<br>•Percentage of local government<br>budget allocated per social/<br>ethnic/ religious group<br>•Score of mobility of social/<br>ethnic/ religious groups outside<br>their immediate locality|•% awareness of main local public service<br>decision-makers (4.75)<br>•Score of involvement in community decision<br>making processes (4.76)<br>•Score of aspiration to be more or less involved in<br>community decision making processes (4.77)<br>•Score of influence in community decision<br>making processes (4.78)|

78
**Table 2. Trade balance of Russian Federation, 2000-2008 (in billions of current US dollars)**

||2000|2001|2002|2003|2004|2005|2006|2007|2008|
|---|---|---|---|---|---|---|---|---|---|
|Exports|114.6|112.7|120.9|152.1|203.8|268.8|334.6|393.8|522.9|
|Imports|61.1|73|84.5|103.2|130.7|164.2|209|282.5|368.2|
|Trade balance|53.5|39.7|36.4|48.9|73.1|104.6|125.6|111.3|154.7|
|Trade balance as a percent of<br>GDP|20.6|12.9|10.5|11.3|12.4|13.7|12.7|8.6|9.6|

_Sources: Rosstat; World Bank, World Development Indicators (2009)._

# **References**

Ades, A and R. di Tella (1999). Rents, Competition and Corruption,” _American Economic Review_ , Vol. 89 (4), 982-993.

Aslund, Anders. 2007. Russia’s Policy on Accession to the World Trade Organization. _Eurasian Economics and Geography_ , Vol. 48, No. 3, May-June.

Freund, Caroline and Bineswaree Bolaky (2008), “Trade, Regulations and Income,” _Journal of Development Economics,_ Vol 87(2), 309-21 _._ Cooper, William. 2006. The Jackson-Vanik Amendment and Candidate Countries for WTO Accession: Issues for Congress, Congressional Research Service Report for Congress. Available at: http://www.us-asean.org/Vietnam/CRS_JacksonVanik.pdf.

Dollar, David and Aart Kraay (2003), “Institutions, Trade and Growth,” _Journal of Monetary Economics_ , Vol. 50 (1), 133-162.

Frankel, J. and D. Romer, 1999, Does Trade Cause Growth, American Economic Review 89(3), 379-399.

Gati, Toby T. 2008. Russia’s New Law on Foreign Investment in Strategic Sectors and the Role of State Corporations in the Russian Economy, Akin Gump Strauss Hauer&Feld. Available at https://www.usrbc.org/pics/File/Member%20Contributions/legal/Foreign_InvestmentInStrategicS ectors.pdf.

Harrison, Glenn, Thomas Rutherford and David Tarr. 1997. Quantifying the Uruguay Round. _Economic Journal_ , Vol 107, No. 444, 1405-1430.

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sumption tend to be more volatile under a privatized system. In addition, if the production structure is heavily concentrated in a few industries, such as those related to natural resources, the outside options for workers who are not well remunerated in those industries are quite limited. All this may engender the political pressure to nationalize key industries in an e¤ort, albeit misguided, to remedy the instability and disparity of the privatized regime.

The seventh fact focuses on the sometimes misused advantages of privatization: Privatized ...rms are more productive than nationalized ...rms due to their incentive-driven investment and labor policies; yet, when they are nationalized, the practices that lead to higher productivity are not kept. Schmitz and Teixeira (2008) analyzed privatization’s impact on private productivity taking as an example the Brazilian iron ore industry. They provided evidence that, while under nationalization productivity gains in the industry were minimal, privatization in the late 1980s led to signi...cant productivity gains not only in previously state-owned enterprises (SOEs) but also in existing private ...rms. Schmitz and Teixeira conjectured that the existence of SOEs a¤ects private productivity through two channels. First, governments can distribute bene...ts more easily to constituents working at SOEs in the industry, a practice which distorts the incentives to exercise e¤ort at work. Secondly, the existence of SOEs leads to less competition and less pressure to decrease costs to all participants in the industry. Further evidence on the higher productivity of privatized ...rms abounds. La Porta and Lopez de Silanes (1999) examined the performance of Mexican SOEs in various industries (including natural resources) after they were privatized. They found that the output of privatized ...rms rose by more than 50%. Moreover, they found that ...rms’operating pro...ts increased by 24% and that incentiverelated productivity gains accounted for 64% of this improvement. Using data on 230 ...rms in 32 developing countries, Boubakri, Cosset, and Guedhami (2005) examined when and how privatization works. The study found that privatization led to a signi...cant increase in pro...tability, e¢ ciency, investment, and output. Their analysis also showed that the macroeconomic environment, structural reforms, and corporate governance played a key role in determining the performance of newly privatized ...rms. Finally, the edited volume by Chong and Lopez de Sil8