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

In its _Results and Performance of the World Bank Group 2015_ , the Independent Evaluation Group (IEG) reported a decline in the outcome ratings of World Bank investment projects that was particularly strong in the portfolio of the East Asia and Pacific (EAP) region. Understandably, this triggered concern within the EAP vice-presidential unit (VPU) about the efficacy of existing systems to provide warnings about the potential that a project will fail to deliver its intended results.

In an attempt to discover what went wrong, the VPU undertook an analysis of the projects that contributed to the decline in ratings. That analysis led to the discovery of a new method for predicting when investment projects that, under current monitoring regimes, appear to be headed toward a moderately satisfactory rating for outcome, but may be at risk of a downgrade on completion. This paper provides some background on the decline in ratings and current monitoring systems, details the portfolio analysis, describes the prediction model that evolved from that analysis, and reports on validation of the model through subsequent testing.

## Reasons for Concern about Outcome Ratings in EAP

### Outcome Ratings Have Declined

Outcome ratings for IBRD and IDA investment projects, based on the three-year average reported by IEG in its annual _Results and Performance_ reports, have been declining across the Bank since 2006.<sup>1</sup> The ratings in EAP have followed the broader trend, but on a somewhat steeper trajectory and in the 2012 fiscal year the ratings for the region dropped below the Bank-wide average. A significant uptick in the FY14 outcome ratings for both the Bank and the region<sup>2</sup> explains the upward shift in the three-year average for the last year in the series (Figure 1).

### **Figure 1. Outcome Ratings, Bank versus EAP**

**_Three-year average for investment project financing for IDA and IBRD_**

<!-- Start of picture text --> 100<br>90<br>80<br>70<br>Bank<br>60<br>EAP<br>50<br>40<br>FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14<br>FY (3-year average)<br>% Satisfactory<br><!-- End of picture text --> 1 These data reflect IEG results as of December 31, 2015. The three-year average for the percent of satisfactory outcome ratings (i.e. ratings of moderately satisfactory or better) is based on 115 FY12-14 EAP projects rated covering 87 percent of the FY12-14 exits. Out of 42 FY14 exits 35 projects had been rated.

2 When ratings are weighted by net commitment amounts, the percentages of satisfactory ratings are higher, indicating that larger projects appear to have been more successful than smaller ones over the period considered. However, the main concern is with the declining number of successful projects.

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outcomes, SCPs explain about three quarters of the explained variation. Program-level contributions vary across fields but even more so within fields. After controlling for field fixed effects, we find that SCP value added to labor market outcomes is higher for older and longer programs taught at more specialized institutions or in larger cities.

These results have important policy implications. The great variation in program-level contributions is a source of concern from the point of view of policy, as some students might enroll in programs that would contribute little to their outcomes. While strong oversight and regulation are called for, our findings provide a rationale for focusing on programs with poor outcomes or poor value added—or programs that, based on their determinants and local market conditions, would more likely have low value-added contributions.

Our results also indicate that, if estimating or using value-added contributions were not possible, the outcomes themselves may provide better quality measures than commonly used metrics such as tuition and program selectivity. Collecting and disseminating program average outcomes is therefore crucial for students and policymakers alike. At the same time, our findings indicate the pitfalls of using program-level contributions or outcomes to build rankings.

Finally, we highlight the need to further understand which elements make programs “good.” Although we document the role of the quality determinants and local market conditions that are available in administrative datasets, we conjecture that other SCP quality determinants and local market conditions such as links with local labor market (which are not measured in these data sets) are more likely to add value. Dinarte et al. (2021) surveyed SCP directors in five countries to analyze SCP quality determinants. Their results provide rich and useful information for policy makers who are interested in understanding what makes an SCP “good” and in expanding the supply of such programs.

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opportunity for children (when considering the potential effects on the physical and emotional development of the child). Furthermore, what is considered ethically acceptable or desirable conveniently depends on a society’s judgment. Another limitation is to the empirical application of measurements. The HOI is also sensitive to the set of circumstances selected as well as the set of opportunities considered. Quality issues are rarely included in the analysis because it is an open-ended conceptual issue (whether an opportunity is simply access to a service or, rather, access to a _quality_ service) and because datasets typically lack the information to systematically include quality considerations. Finally, from a policy point of view, HOI does not address the causes or motivations behind the distributive features of a policy or set of policies that cause the inequality of opportunities.

# **3. Choice of Opportunities and Circumstances for Côte d’Ivoire**

As with previous work on opportunities using HOI, the focus is on opportunities for children for two main reasons. First, intuitively there can be little disagreement about the set of circumstances that are beyond a child’s control, and the issue of ―effort‖ in achieving access to the opportunities can be considered irrelevant in the case of children. Second, and perhaps more important, ―opportunities‖ for children, which are defined as access to basic goods and services early in life, are generally accepted as necessary for an individual to progress to a productive adulthood and fulfill his or her potential as a member of society.

In selecting the final set of indicators among the list of basic opportunities (as discussed in the previous section) that can be analyzed as ―opportunities‖ for Côte d’Ivoire, two issues are of paramount importance:

- (i) **The indicators must be available from available data sources** . Fortunately, a series of household surveys for Côte d’Ivoire have been administered since 1985. The surveys are nationally representative and fairly comparable over time. In addition to the long time period covered, analysts can take advantage of the information on household income and spending, which are usually not available in other surveys used for the HOI study of African countries.

- (ii) **The indicators chosen must be relevant for Côte d’Ivoire and provide useful information** . In terms of relevance, the broad categories of basic opportunities identified in earlier work (education and access to basic services) correlate to capabilities that are almost universally accepted as necessary for a productive life. However, in defining the precise indicators within each broad category, country-specific factors need to be taken into account. In particular, it is

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based on information on similar taxable goods and services rather than taxpayers’ actual sale.<sup>51</sup> This creates opportunities to define tax liability on a case by case basis, disadvantages suppliers that want to sell at a discount price, and leads to abuse and corruption. Such practices will be outlawed with the introduction of the new VAT legislation in 2016.

Good taxpayers are subject to disproportionate pressure from tax administrations.<sup>52</sup> One reason for that is because tax administrations are guided primarily by revenue targets, which are set at the beginning of the year. Top level tax officials then pressure their subordinates who in turn pressure good taxpayers to contribute more revenue. VAT refunds to exporters are often postponed particularly in the last quarter of the financial year; furthermore, VAT is not always fully refunded. For example, apparel exporters in India have complained that some of the indirect taxes and levies are never refunded and that refund rates are subject to drastic and sudden changes without a reason.<sup>53</sup> The problem appears to be common for exporters in all South Asian countries. Such practices have a highly negative impact on cost competitiveness of domestic producers and may deter FDI.

Paying taxes in South Asia is often associated with corruption. Poor training of tax officials, low salaries, lack of incentives, inadequate use of IT systems and numerous loopholes in the legislation are among the factors that contribute to corruption in the tax system. In Bangladesh and Pakistan 41% and 29% of firms respectively are expected to give gifts when dealing with tax officials (Figure 3). Such rampant corruption hurts business, particularly SMEs, undermines confidence in government institutions and reduces willingness to pay taxes.

**Figure 3. Percent of firms expected to give gifts in meetings with tax officials**

<!-- Start of picture text --> 45 41<br>40 33.7<br>35 29.1<br>30<br>2520 15.3 14.6 17.4 18.9 17.9 17.9 13<br>15 10.8 10.9<br>10 7.7 7.3 8.3 6.5<br>5 1.2 0 2 0.4 3.1 0.8<br>0<br><!-- End of picture text --> Source: World Bank. Enterprise Surveys Taxes are paid by a minority of firms in South Asia that have to contend with relatively high corporate tax rates and poor tax administration. Most firms do not pay any taxes (due to informality and availability of legal exemptions) or reduce their tax liabilities through various schemes. This regime results in a

> 51 Ibid

> 52 This is well documented in the First Report of the Tax Administration Reform Commission in India. Interviews with tax experts working in South Asia suggest that the problem of disproportionate pressure on good taxpayers due to revenue targets is common throughout the region.

> 53 Apparel Export Promotion Council, India. 2013. Agenda Note for Consideration of Inter‐ministerial Workshop on Apparel Sector.

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<!-- Start of picture text --> Yes po7 toot n rrr eeElevation <= 5.06ae ———Population >= 0.08 Extraa High Risk<br>panna| Flood enna nnnn------, yg! Elevation<= 22.5 hn nn nnn nnn nnnnena ne! High Risk<br>tag >= 0.67 Co<br>No TM\WoneoElevation <= 5.06<br>ncnecascnso noo! Se-—-, Medium Risk<br>) Population >= 0.06 |<br>Sonne nnn nena! Low Risk<br>| Floodtag =—sisit} ~SSséElevation =}; =~ Population =<br>FloodTag (Ramani Huria) r Elevation of household ir Population densityof |<br>i... Coverage of EA_____'|____ from geolocation ___'|_____household’sEA____|<br><!-- End of picture text -->
# 2. Data

This section provides an overview of the data types and sources that are crucial for assessing the impacts of flooding on the urban economy. For this purpose it briefly discusses flood maps (Section 2.1), employment data (Section 2.2), Open Street Map network data (Section 2.3), and firm-level data from the World Bank’s Enterprise Surveys (Section 2.4).

## 2.1. Flood maps

Flood risk information is typically communicated through flood maps that describe the spatial extent of flooding. For the purpose of this study, three different flood maps were used. This section will briefly present each of them: i) flood maps produced through the SSBN global flood model, ii) flood maps produced by a tailored flood model, and iii) empirical flood maps produced through community mapping. Table 2 in Annex 5.1 provides an overview of the availability of different flood maps for 13 cities in SubSaharan Africa.

### 2.1.1. SSBN-modelled flood maps

The main flood data used in this analysis are city-level flood maps derived from the SSBN global flood map.<sup>1</sup> The underlying flood model has a resolution of 90 meters, and considers floods that are either fluvial (i.e. caused by overflowing bodies of water) or pluvial (i.e. caused by a saturation of the absorption capacity of the ground or drainage systems). In this analysis, fluvial and pluvial maps were combined to assess the full extent of potential flooding.

SSBN flood maps are available for several return periods, that denote the average repeat interval of an event with a certain intensity. Here, return periods of 10, 50, and 100 years are considered. Flood model estimates provide the extent of flooding as well as the expected flood depth in each grid cell for each return period. By using a common methodology in all cities, SSBN flood maps are useful for analyses comparing the effects of flood risk in different regions. The availability of different return periods and the assignment of different flood depths allows for the differentiation between flood risk of varying severity along two dimensions. However, these flood maps can be impervious to local built infrastructure.

> 1 <u>http://www.fathom.global/</u>

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The annual costs of being formal include a sanitary tax (R$53.40-106.76, depending on activity) and the TFLF, a municipal inspection tax (R$77.26) that firms need to pay within 30 days of formalizing and then again at the beginning of each year; and a revenue tax. The revenue tax is a flat rate of R$ 51.65 per month for individuals who qualify as a MEI, and otherwise under SIMPLES ranges from 4% to 8.21% depending on revenue level and industry<sup>4</sup> . In addition, it is mandatory for formal firms with two or more employees to use an accountant, who must prepare cash flow and accounting statements each month, ensure the firm makes the monthly tax payments, and each year submit a form to the federal tax authority. In Belo Horizonte the accountants charge on average R$300 per month for this service. Accountants are not required for MEIs with one or fewer workers and revenue under the MEI revenue threshold.

For the median firm in our baseline survey (described below), which reports having one worker and earning R$30,000 in annual revenues and R$1,200 in monthly profits in our baseline surveys, the annual costs of being registered would therefore be approximately R$750 or 5.2% of their annual income. For a firm at the 75<sup>th</sup> percentile of reported annual revenues (R$57,000) and monthly profits (R$2,000), with the median of 2 employees, annual costs would therefore be approximately R$6,580 since they would need an accountant, or 27.4% of annual income. This assumes formal firms report their full revenues. Our baseline survey asks firms what percentage of revenues they think other firms report, and the mean (median) is 46% (50%). Firms may also underreport workers, especially if this gets them at the margin where they qualify as an MEI. The annual cost of being formal is thus likely to be 5-25% of annual income, with many firms at the lower end of this range, depending on whether firms report all their revenues, and whether their reported revenue exceeds the threshold needed for an accountant or not.

# **2.2. Are Firm Owners Well Informed about the Process of Formalizing?**

Our baseline survey reveals that most informal firms interviewed lack key information about the process of formalizing, that there is substantial heterogeneity in their beliefs, and that most think formalizing is more time-consuming and costly than it is in reality. Only 46 percent of firm owners claim that they know what is needed to register and only 19 percent knew that the Junta Comercial (Chamber of Commerce) is where firms need to go to register. The mean (median) time firm owners think it takes

> 4 The first R$180,000 in annual revenue is taxed at 4% for firms in commerce, 4.5% for firms in industry, and 6% for firms in services. The next R$180,000 is taxed at 5.47% for firms in commerce, 5.97% for firms in industry, and 8.21% for firms in services. This tax includes a number of taxes including income tax, contributions to social security, and employer pension contributions.

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Table 6: Spillovers: Literacy and Numeracy Skills of target children in _T_ 2 communities

|||_Literacy_|_Skills_||_Num_|_eracy Skills_|
|---|---|---|---|---|---|---|
||Prop. <br>|Zero<br>|Z-s<br>|core<br>|Z<br>|-score<br>|
||(1)|(2)|(3)|(4)|(5)|(6)|
|Any Treatment (T1 or T2)|-0.077**<br>||0.187*<br>||0.243**<br>||
||(0.036)||(0.106)||(0.116)||
|Videos (T1)||0.024<br>||-0.071<br>||-0.117<br>|
|||(0.043)||(0.108)||(0.132)|
|Videos + Mobile (T2)||-0.214***||0.550***||0.730***|
|||(0.036)||(0.136)||(0.139)|
|Videos + No Mobile (T2)||-0.166***||0.402***||0.558***|
|||(0.034)||(0.147)||(0.139)|
|Observations|8,928|8,928|8,928|8,928|8,928|8,928|
|R-squared|0.163|0.184|0.248|0.253|0.264|0.280|
|Covariates|YES|YES|YES|YES|YES|YES|
|Enumerator FE|YES|YES|YES|YES|YES|YES|
|Baseline Mean|0.976|0.976|0.000|0.000|0.000|0.000|
|Control Mean in F-up|0.438|0.438|-0.713|-0.713|1.063|1.063|
|T2 mob. vs T2 no mob. (p-value)||0.017||0.164||0.030|

Note: Column 1 and 2 show the results of linear probability models of the proportion of children scoring ”zero” in letter recognition. Column 3-4 show z-scores of literacy skills and Column 5-6 z- scores of numeracy skills. Test scores are normalized using the mean and standard deviation for the control group at baseline. All regressions have clustered standard errors at the school catchment area level. The covariates considered in all regressions are: age of target child, gender of target child, education of household head (baseline), availability of food (baseline) and enumerator fixed effects. *** p _<_ 0.01, ** p _<_ 0.05, * p _<_ 0.1 Overall, the spillovers observed in _T_ 2 communities are encouraging as they reveal that the m-Learning add-on not only impacted learning outcomes of the target child, but also impacted learning and behavioural outcomes of siblings. Moreover, within _T_ 2 communities, we observe large spillovers on target children and siblings who did not receive the mobile phone with m-Learning apps.

# **6.4 Heterogeneous Effects by Gender and Age**

Appendix Tables A16 and A17 present results on the main outcomes of this study interacting treatment variables with a female binary variable. Overall, the interventions where equally effective for girls and boys. When exploring heterogeneous effects by age and A18 shows no effects for – treatment effects are gender, heterogeneous by age boys the same for children between 6 to 9 years old based on their age at baseline. For girls, we observe a slight variation; all children are similarly affected by _T_ 2 (Videos and Mobile Apps), with the exception of 7-year-old girls presenting a smaller impact of _T_ 2 on learning skills.

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quantitative predictions in an infinite horizon general equilibrium model of debt and default.

This paper also builds on the literature on the quantitative implications of debt dynamics and default in incomplete asset markets models: Eaton & Gersovitz (1981), Aguiar & Amador (2013), Aguiar & Gopinath (2006), Cuadra _et al._ (2010), Pouzo & Presno (2014), and Yue (2010).<sup>4</sup> In fact, the benchmark for comparison is Arellano (2008), which accounts for the empirical regularities in emerging markets as an equilibrium outcome of the interaction between risk-neutral creditors and a risk averse borrower that has the option to default.<sup>5</sup> Hatchondo _et al._ (2017) studies the effects of introducing a limited non-defaultable financing option in a small-open economy. However, they abstract from the strategic interactions that might be generated among the participating member states. Their results suggest that access to such an asset for a given country could produce substantial welfare gains and lead to significant reductions in sovereign debt and spreads. Arellano & Bai (2014a), Arellano & Bai (2014b) and Lizarazo (2009) examine the contagion across sovereign defaults through the existence of common lenders. In this paper, I extend this idea and I develop a model that nests common lenders and borrowers. Abrah`am<sup>`</sup> _et al._ (2015) develop a model of the Financial Stability Fund (FSF) across sovereigns as a long-term partnership with limited ex-post transfers. To the best of my knowledge, none of the papers in the quantitative default literature addresses the impact of the strategic interactions that joint liability bonds might generate.

The benchmark model is calibrated for the case of a single country issuing individual bonds. Then, I compare this benchmark to a world where two countries can issue joint liability bonds under two different scenarios: (i) the two countries are subject to different processes of idiosyncratic income risk (asymmetric case), and (ii) the two countries are subject to the same process of idiosyncratic income risk (symmetric case). The findings show that countries have cheaper access to financial markets in both scenarios, even though the welfare implications differ drastically between both scenarios. In the symmetric case (two core countries issuing joint liability bonds), the model predicts welfare gains for both countries since the cheaper credit effect dominates to the contagion effect. In contrast, in the asymmetric case Periphery countries experiment welfare gains, while Core countries face welfare losses when both countries start with large debt-to-output ratios. If the Periphery countries start with low debt-to-output ratios, then the Core countries could also benefit from the introduction of Eurobonds.

The paper is structured as follows: Section 2 presents the theoretical models for the bench-

> 4See Aguiar & Amador (2014) or Tomz & Wright (2012) who explore more key issues in this literature.

> 5Alternative models of default focus on rollover risk, such as Cole & Kehoe (2000) and Conesa & Kehoe (2015), but I do not consider this issue in my analysis.

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