rafmacalaba/datause-encoder-data huggingface dataset:
3 consistent with the patterns of correlation found in the data. There may be other. theories that explain these correlations in very different ways. At a minimum, the analysis here has broadened the task that alternative other theories must attempt. In discussions ofthe correlation between capital accumulation and growth, it will no longer be enough to put forward an explanation for the correlation between these two variables alone. An alternative theory must do what the theory here does, simultaneously explain this correlation and other correlations with trade and human capital data.

No doubt other such theories can and will be put forward. However, the theory suggested here seems to have the additional strength that it conforms to our experience at the micro or firm level, where sometfing closer to controlled experiments are feasible and where we therefore have a firmer grip on the nature of causal connections. Just as informal experience and formal evidence at a less aggregate level would suggest, the thenry described here attributes animportant causal role for the creation of new goods, especially new producer durables, in the cumulative process of growth and technological change. It suggests that the stock of inputs used in the research and development process influences the rate at which new goods and technologies emerge. And it suggests that variables like the degree of patent protection that affec **t** he returns to innovation will matter for the aggregate rate of technological change. All of these intuitive obvious observations are markedly absent from most discussions ofaggregate growth, both in the older neoclassical models and in many of the more recent models as well. In a strict formal sense, the data presented here do not solve the problem of endogeneity. Atthe aggregate level there simply are no clearly exogenous variables. The main support for the causal interpretation suggested here comes from the fact that the theory can be applied at both the aggregate and at a much finer level, and that its implications at the less aggregate level seem sensible.
# **Tabl- of Cont-nts**

|Growth of the Brazilian citrus industry....<sup>*</sup><br>o.. a....<br>..........<br>....<br>2|
|---|
|Brazilian economic policies and the citrus industry<sup>.</sup><br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>6|
|Trade policies<br>and the macroiconomic<br>environment<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>6<br> <br> <br> <br>|
|Sectoral<br>policies<br>.<br>.<br>.<br>.....0.<br>a...<br>.<br>.<br>.<br>.<br>.<br>. ...<br>. ..<br>..<br>. . .<br>8|
|Marketstructure, industrial organization, and competitiveness.<br>.<br>. .<br>12|
|The domestic market..<br>. . ..<br>. .<br>....<br>.<br>...<br>.<br>. . . . . . .<br>...<br>12<br>|
|The international<br>market .n.al<br>..**......**<br>arket<br>..................<br>13<br> <br>|
|Industrial organization...........<br>o.......0 0<br>***a9***<br>.<br>......<br>.<br>15<br>|
|<br>Internatlonal competitiveness . . . . oa. a. a. . . . <sup>. . . . .</sup><br>16|
|Unfair trade cases.<br>.<br>..<br>.<br>.<br>..<br>....<br>.<br>..<br>..<br>.<br>... . . .<br>.<br>.<br>17|
|Protectionism and the U.S. citrus industry. . .<br>..<br>.<br>.<br>.<br>**.**<br>o**.** .<br>17<br> <br>|
|The U.S. countervailing<br>duty investigation.<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>*.<br>.<br>. .<br>19<br>|
|AntidumPingcases<br>.<br>.<br>.<br>-<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>-<br>.<br>.<br>.<br>a<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>20<br> <br> <br>|
|<br>The U.S. antidumping<br>case<br>....................<br>*<br>................ 22|
|<br>The Australiansntidumping<br>caae<br>.................<br>24<br>|
|<br>Effects of unfair trade actions.<br>..........<br>*..**.....<br>25<br> <br> <br> <br> <br>|
|Effects<br>on policy.<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>**.**<br>.<br>.<br>.<br>* *.<br>.<br>*.<br>.<br>.<br>.<br>.<br>25|
|<br>Effects on the industry<br>.....................<br>26|
|Co.xclusion.<br>...........<br>. .... ........................<br>2;|
|References<br>**99 **<br>...**.9**.<br>.<br>.<br>. . . .<br>. . .<br>. . .<br>.<br>.<br>,<br>**9*** *<br>31|
|Tables<br>.<br>.<br>. .<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>33|
|Nlotes ......<br>.. .. .. ..........<br>.<br>43|
10 services are capped.<sup>5,11,16-19</sup> The reason why in Taiwan (China) catastrophic payments become increasingly concentrated among the poor as the threshold is raised but do not in Korea is likely to be due to the fact that Korea’s benefit package is so limited and that of Taiwan (China) so broad. Those incurring especially large out-of-pocket payments in Korea are likely to be people whose out-of-pocket spending reflects at least in part payments for uncovered services, the demand for which is likely to rise strongly with income. In Taiwan (China), by contrast, they are likely to be people incurring large copayments for covered services, and the demand for these, it seems, is not higher among the better off (more on this below).

_Figure 6: Catastrophic out-of-pocket payments in Japan and the Asian Tigers_ * <!-- Start of picture text --> 0.20<br>25% Hong Kong, China<br>Korea, Rep.<br>0.15<br>Taiwan, China<br>15%<br>0.10 25%<br>0.05<br>5%<br>10%<br>0.00 15%<br>5%<br>10% 10%<br>-0.05 15% 5%<br>25%<br>-0.10<br>0% 5% 10% 15% 20% 25%<br>% with catastrophic payments<br>Kakwani for catastrophic payments<br><!-- End of picture text --> The introduction of UHI in Japan, Korea and Taiwan (China) all led (albeit after a lag in the case of Japan) to a reduced emphasis on out-of-pocket payments. It is plausible that exposure to the risk of very large out-of-pocket payments also fell. If this is the case, households affected by UHI can be expected to have reduced precautionary savings. In the case of Taiwan (China), this appears to have happened—estimates derived by comparing before-and-after changes in saving behavior of those gaining insurance as the result of UHI suggest that the introduction of UHI reduced savings in Taiwan (China) by 9-14%.<sup>24</sup> The largest proportionate impacts were observed for those saving least before the reform.

> * The figure shows the fraction of households with annualized per capita out-of-pocket payments exceeding 5%, 10%, 15% and 25% of annual per capita total household spending. Also shown is the concentration index for the incidence of catastrophic payments. A positive index indicates catastrophic payments were more common among the better off, while a negative index indicates they were more common among the poor. The data shown in Figure 3 are from van Doorslaer et al.<sup>23</sup>
effects, with the direct effects accounting for less than 14 percent of the final change in cost of living. Note that the direct effect is simply computed as the product of the share of total consumption accounted for by oil and other fuels (for example, 1.14 percent in urban areas) times the share of total income allocated to consumption (93.1 percent in urban areas), times the price increase for oil (34 percent). Thus, the direct effect is estimated at 0.36 percent in urban areas. The direct effect represents itself about 10.69 percent of the total effect we obtain the total effect at about 6.19 percent. These results suggest that the impact of an increase in crude oil and other fuels on household expenditure could be large. This result is not too surprising given that crude oil and other fuels imports represented 9.6 percent of GDP in 2005 (according to the SAM), and their share in total imports was 14.2 percent. While households spent only 2.13 percent of their total consumption on this commodity, crude oil and other fuels are used in many sectors of the economy, which means that the multiplier or indirect effects are large. Indeed crude oil and other fuels represented 8.5 percent of all intermediate consumption<sup>5</sup> .

Urban households are slightly more affected than rural households, and exhibit lower direct effects. The slightly higher impact on the cost of living of urban households can be partly explained by the higher consumption share for diesel, petrol, transport, and community services in urban areas, which experience higher price changes. However, if we were looking at poverty (using for example poverty gap measures), since rural households tend to be much poorer to start with than urban households, the negative impact of the oil shock would probably be larger for rural households.

> 5 This compares to 5.6% in Lesotho in 2000, 1.1% in Tanzania in 2001, 4.1% in South Africa in 2000, and 11.1% in Uganda in 1999 according to SAMs for these countries.

12
20

**able to absorb** this without difficulty, while the impact in sonie industries such **as** iron and steel or paper would be higher eteris paribus, 2 to 3 % of output price in Germany. Such an increase could aggravate their existing structural problems. At present in many countries rea; energy prices are also about 30% below their levels ten years ago.

**Table 11: Prices of electricity for Industry ln selected OECD countries, 1990**

||**Electricity**<br>**USclu/1000lkWb**|
|---|---|
|**OECD**|**71**|
|**Auguia**|**65**|
|<br>**Filand**|**63**|
|**Norway**|23|
|**Sweden**|**56**|
|**_Gernany_**|91|
|**Japan**|126|
|**USA**|**48**|

# **Source: OECD**

The OECD data indicates that European countries and Japan devote more of their environmental expenditures to investment than the United States (Figure 1 and Table 12)." Despite the difficulties related to its classification and measurement (see footnote 8), the share of investment spending on environmental-control expenditures can be one indic tor of internalization of pollution-control costs, and of promoting the positive impact of higher standards through technological change and innovation. It can also help generate private benefits that reduce the net impact of expenditures on competitiveness. In the United States in the early 1980's the share of investment in total industrial pollution expenditures was above 50%, but declined steadily thereafter and in the mid-1980s accounted for less than 30%. Austrian investment on environmental control was high in the 1970's and has increased further since the

> In **the** OECD classirication investment expenditure covers construction or **acquisition** of plant **and** equipment, contixuction **or** acquisition of buildings, improvements, acquisition of land. **They** refer to actual costs incurred in the year in question. Running **costs** include operation **and** maintenance on labor, energy, materials other than energy, services, rents, **repairs.** Sec OECD (1990) for further details. The dividing line between the two types **of** expenditure is **often** blurred. For example, investments in human capitAl in training, preparation of new guidelines, new ways of disposing **waste** etc., which are likely to be included in running cosu could be considered capital expenditures.
managing interventions to maintain the momentum of liberalization and strengthen the politics of avoiding, rather than of imposing, such restrictions in the future.

The first objective is about economically good interventions versus economically bad; the second is—pragmatically speaking and over the long run—about less interventions rather than more. It is also about the number and form of interventions in the short run that, over the long run, will minimize opposition to liberalization.

# **_The Rules Are Too Generous_**

Although the administrative dimensions of the rules have been supportive, the economic content has been less so. A key point that emerges from the country studies is that, from an economics perspective, WTO rules on safeguards and antidumping are too generous with respect to separating either good interventions from bad or less interventions from more. Although antidumping, in theory, is about interventions that make economic sense, in reality, WTO guidelines allow restrictions that amount to ordinary protection. Aware of this characteristic, Latin American governments attempted to make operational the economic concept of distortion. Qualitatively speaking, this concept would help them to separate trade interventions whose economics is good from interventions whose economics is bad. Sticking to the concept of distortion would also reduce the number of interventions that received sanction. At the same time, these governments introduced lesser duty rules and national interest clauses—additional bases not to restrict in instances in which the WTO rules would allow a restriction.

The safeguard mechanisms that the governments set up also included disciplines not mandated by WTO rules. WTO safeguard rules require only an investigation and determination of injury from imports and of the cost that import competition imposes on competing domestic producers. They do not require that benefits to industrial users and to consumers likewise be taken into account. In the interest of reaching economically sensible safeguard decisions, Latin American governments supplemented their safeguard processes with requirements for an adjustment plan (and an economic report in the case of Peru) that quantifies the impact of the requested restriction on final and intermediate consumers and the public interest. The logic of the first of these is to assure that the protected industry will eventually be viable in an open economy and will not be a long-term burden on the rest of the economy. The logic of the second is that the imports that are an inconvenience for some domestic interests provide benefits for other 39
is formed from the accumulation of sediment deposited by rivers or streams. These types of aquifers can have a high storage capacity and can provide a reliable source of water for irrigation and crop production. They are often found in floodplains or along the course of major rivers.

The local shallow aquifer is typically found near the surface<sup>2</sup> (Figure 2b) and can be replenished relatively quickly by local precipitation or surface-water sources (Figure 2a). These aquifers may be suitable for small-scale irrigation and crop production. Because around 70% of African farmers practice subsistence agriculture, their abundance (Figure 3) and relatively lower costs of extraction make these aquifers most suited for farming. Therefore, we will restrict our analysis to local shallow aquifers.

# **3 Data**

## **3.1 Groundwater Data**

We employ a novel aquifer-typology dataset compiled by Rodella, Zaveri, and Bertone (2022). It consists of a spatially exhaustive list of 8,099 aquifer grids in SSA, along with information on the surface area they cover, the volume of water they hold, and their aquifer type. This dataset is up to date as of 2018.

This dataset contains information on the four classes of aquifers discussed in the Background section. The data are collected at the grid level (0.5 degree fishnet). For each grid, the data contain information on what proportion of the grid is major alluvial, complex, karstic, and local shallow, as well as the percentage of the grid cell that is not covered by the data for typology classification. This dataset does not contain information on replenishment (or recharge) rates of aquifers.

In this analysis, we combine the global aquifer dataset provided by Rodella et al. (2022) to the official World Bank administrative boundaries (with a special focus on SSA). The groundwater data contain the geographic centroids of each aquifer. We assign each aquifer to the country containing its centroid. To ascertain the exact shape, we use Rodella et al. (2022) to obtain the shapefiles of the major aquifers. For aquifers whose shapefiles we were unable to find, we construct circular buffers around these centroids such that the area of the circle matches the surface area of the aquifer.

We estimate aquifer statistics including the area of land covered by the aquifers, the volume of water in absolute terms, per capita, and as a proportion of the entire land area of the country to get a sense of which countries have the richest resources of shallow ground water.

We complement the Rodella et al. (2022) dataset with data from the Africa Groundwater Atlas, a dataset curated by the British Geological Survey. The Africa Groundwater

> 2In SSA, 70% of aquifers lie at a depth of 50 meters or less, 20% lie at a depth less than 25 meters, and 30% lie at a depth of less than 7 meters. This finding suggests groundwater extraction using dug wells is possible in the region, allowing for access to groundwater at lower costs.

5
-~~~~~~~~~~ -22 -

H-However, RTAs do not necessarily increase global welfare or even the welfare of the member countries due to trade diversion. Trade is diverted when '.nports that used to come from third countries at lower prices become relatively more expensive due to the preferential access granted to a higher cost source within the agreement. By diverting trade from outside to the inside the region, global as well as regional, welfare is reduced. So world production is diverted from least-cost to higher-cost supply sources and therefore the world allocation of resources worsens. But more importantly, the region loses. Consumers within the region have to pay higher prices and the shift in production within the region leads to a high cost or more inefficient production. When the dynamics of this is considered, if one can show that the increase in costs is a short-run phenomenon and that over time the costs could be reduced by learning, then there is some semblance of dynamic gain. But then the question arises whether forming an RTA is the best way of inducing leaming and cost reduction.

It has been observed that it is "nearly impossible to determine definitively and precisely whether trade creation or trade diversion predominates as a result of the establishment of any particular regional trade agreement."<sup>47</sup> The case for or against regional trade arrangements is hard to define. Formation of an RTA may improve the union's terms of trade vis-a-vis the rest of the world. Experience provides conflicting evidence to support or reject RTAs -on the basis of trade creation and trade diversion. The CACM and the EC are examples of arrangements that were successful in creating trade. However, under MFN, their trade gains could have been even greater. At the other extreme, the LAFTA showed a substantial level of trade diversion and very little trade creation. However, the actual results show that "most preferential trading blocs accomplished little, neither creating nor diverting much trade."" A recent study that analyzed the trade effects of the SEM on developing countries concluded that exports of agriculture and primary products from these countries into the EC

> '<sup>7</sup> Richard Steinberg. Art. cit. p. 322. Il The World Bank. Q0. cit. 1994. p. 65.
_Exchange Rate Arrangements and Restrictions_ .<sup>6</sup> However, countries with closed capital account may try to increase the stringency of those controls by imposing restrictions on current account transactions, multiple exchange rate practices or the surrender of export proceeds while countries with an open capital may still restrict the flow of capital by imposing other restrictions on cross-border financial transactions (Chinn and Ito, 2007). Therefore, our second policy measure is the _Chinn-Ito index of financial openness_ which incorporates the different types of restrictions on cross-border financial transactions stated above. Further details on the construction of this index are given in Chinn and Ito (2007).

Our _outcome measure_ of financial openness involves data on foreign assets and liabilities from Lane and Milesi-Ferretti (2001, 2006). We construct the ratio of foreign liabilities as a percentage of GDP (which include stocks of liabilities in portfolio equity, foreign direct investment, debt and financial derivatives) and for robustness purpose the ratio of foreign assets and liabilities to GDP. Note that, for analogously to the case of trade openness, we would evaluate the role that the composition of capital flows may play in smoothing shocks to the RER. Hence, we break down our outcome measure of financial openness into equity- and loan-related foreign liabilities. While the former includes the foreign liability position in foreign direct investment and portfolio equity, the latter includes only the debt liability position. The same calculation is performed for the ratio of foreign assets and liabilities to GDP.

_Volatility of Fundamentals:_ We describe the sources of the data on the RER fundamentals formulated in the model and used in this paper. First, the _volatility of productivity shocks_ is computed as the standard deviation of annual changes in the ratio of Home to Foreign labor productivity. Labor productivity is the ratio of real GDP to total employment and the magnitude for the foreign country is computed as the trade-weighted average of labor productivity of the rest of the world. In turn, real output is the real GDP as constructed by Loayza, Fajnzylber and Calderón (2005) using Summers and Heston (1991) output figures as well as WDI.

Next, the _volatility of fiscal policy_ , _Vol(Gi)_ , is constructed following the methodology outlined in Fatas and Mihov (2006). We collect data on general government consumption and we isolate movements in government consumption that can be attributed to exogenous policy decisions and not related to the state of the economy. To isolate these exogenous policy changes, we regress for each country the (log of) real government

> 6 Data on capital account restrictions can be downloaded from: <u>http://www.nber.org/~wei/data.html</u>

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