rafmacalaba/datause-encoder-data huggingface dataset:
- 14 -

Rail users are more focused on global and/or national markets.<sup>8</sup> In our sample, rail users are also found to be relatively larger: The average operating costs are significantly greater at TSh539 million. Their transport cost shares are also greater: Rail users seem more transportintensive. As indicated above, rail users tend to hold more inventory, though the _t_ -test statistic is not statistically significant.

**<u>Table 4. Two-sample t test statistic tests between road and rail users</u>**

||Road users<br>|<br>|Rail benefi<br>|ciaries<br>|Difference<br>|<br>|
|---|---|---|---|---|---|---|
||Mean|Std. Err.|Mean|Std. Err.|Coef.|Std. Err.|
|Sector dummy variables:|||||||
|Light manufacturers|0.460|(0.028)|0.529|<br>(0.125)|-0.069|(0.124)|
|Agribusinesses|0.323|(0.026)|0.294|<br>(0.114)|0.029|(0.117)|
|Foreign share (%)|6.152|(1.288)|20.294|<br>(9.220)|-14.142|(6.023) **|
|Market orientation dummy:|||||||
|Global market|0.131|(0.019)|0.294|<br>(0.114)|-0.163|(0.086) *|
|National market|0.482|(0.028)|0.882|<br>(0.081)|-0.401|(0.123) ***|
|Local market|0.857|(0.019)|0.529|<br>(0.125)|0.327|(0.090) ***|
|Total cost (TSh billion)|0.247|(0.018)|0.539|<br>(0.101)|-0.292|(0.084) ***|
|Share of transport costs (%)|13.025|(0.851)|17.015|<br>(6.623)|-3.990|(4.020)|
|Inventory (days)|21.405|(1.749)|25.000|<br>(4.899)|3.595|(7.149)|

# **III. EMPIRICAL MODEL**

To assess the possible impact of rail transport on firm productivity, the traditional cost function is considered as a basis of empirical modeling. As discussed above, this approach has particular advantage for controlling potential heterogeneity across firms. Our sample data cover significantly different firms, as will be discussed below:

> 8 While local market orientation is referred to mean that firms’ main product lines are targeted at their local areas, national market orientation indicates that firms are active in several locations in the country. Global market oriented firms involve significant amounts of international transactions.
playing key roles. Qatar National Bank has become one of the largest regionally active banks in the Middle East and North Africa (MENA), and Moroccan banks have seen an unprecedented expansion in cross-border activities, particularly in Sub-Saharan Africa.

**Table 1:  Banking activities of groups headquartered in EMDEs (“EMDE groups”)**

|**Subsidiaries of EMDE gro**<br>|**ups in overseas EMDEs**<sup>**1**</sup><br>|
|---|---|
|**$1 trillion**|**11%**|
|_Total assets_|_Annual 2009-13 growth rate of total assets_|
|**Countries with EM**<br>|**DE group presence**<br>|
|**46**|**75**|
|_Number of home EMDEs_|_Number of host EMDEs_|
|**Relative size of subsidiaries of E**<br>|**MDE groups in overseas EMDEs**<br>|
|**2% (8%)**|**11% (31%)**|
|_Median (75_<sup>_th_</sup>_pctile) share of total banking_<br>_assets in the group’s_**_home_**|_Median (75_<sup>_th_</sup>_pctile) share of total banking_<br>_assets in the group’s_**_host_**|
|**Cross-border claims of EMDE groups fro**|**m seven countries on overseas EMDEs**<sup>**2**</sup>|
|**$847 billion**<br>_Vis-à-vis all counterparties around the world_|**$233 billion**<br>_Vis-à-vis intra-group entities around the_<br>_world_|

1. Data for 2013 from Claessens and Van Horen (2015); Bankscope; team calculations.

2. Data for 2017 Q1 from Bank for International Settlements; team calculations. Locational bank claims from EMDE groups headquartered in Brazil, Chile, South Africa, Mexico, Panama, Korea, Turkey.

There is an extensive literature on the implications of international banking in EMDEs which has lessons for dealing with cross-border banking activities (e.g., Cull and Martinez Peria, 2010; Claessens, 2016, and World Bank, 2017, for an overview; CGFS, 2014 for EMDEs; IMF, 2015 for SSA; Eyraud, et al., 2017 for LAC). A key message is that there are trade-offs between the benefits and costs of financial integration through cross-border banking, which depend on the interaction between home and host country factors (e.g., information infrastructure, market structure, monetary policy, regulation and supervision) as well as bank group features. The literature has focused on four aspects of that trade-off: (i) financial development and inclusion; (ii) 3
# The Elusive Impact of Corporate Tax Incentives

Massimiliano Calì<sup>∗1</sup> , Giorgio Presidente<sup>2</sup> , and Thiago Scot<sup>3</sup>

> 1 _World Bank_

> 2 _Bocconi University_

> 3 _World Bank_

Keywords: Tax Incentives, Corporate Income Tax, Export-oriented firms, Business Investment JEL classification: H25, H32

> ∗The authors thank Jawhar Abidi for excellent research assistance and Jaffar Al Rikabi, Paulo Bastos, Kevin Carey, Rihab Challadia, Arafet Lachtar, Daniel Prinz and Bob Rijkers for useful comments. The financial support of the World Bank Global Tax Program (GTP) is gratefully acknowledged. The authors also thank the Tunisian Institute of Statistics for generously sharing their data with us and hosting us, particularly Ramzi Channouf and Fathi ElhajAmara. The views expressed in this paper are of the authors and do not necessarily reflect those of the affiliating institutions.
**Figure 7. Redistributive impact of an increase in taxes and transfers of 2% of GDP**

<!-- Start of picture text --> 0.02<br>0.01<br>0.00<br>-0.01<br>-0.02<br>Argentina Brazil Chile Colombia Mexico Peru LAC6<br><!-- End of picture text -->

# _3.3 Tax incidence_

The distributional implications of Latin America’s tax structure have been widely debated. On _a priori_ grounds, the large weight of indirect taxes in the region’s total revenues leads to the presumption that overall taxation is likely to be regressive or neutral at best, given the conventional wisdom that income taxes are usually progressive while consumption taxes such as the VAT are not. This, of course, is not necessarily the case, since multiple rates for VAT and similar taxes may actually achieve some progressivity – at the cost of potentially significant administrative complication -- by granting more favorable treatment to food and other goods primarily consumed by the poor.<sup>30</sup> Indeed, most Latin American countries make use of multiple VAT rates (Gómez Sabaini, 2005).

On the other hand, in a number of Latin American countries, the effective income tax rates of the upper income brackets are only a fraction of the statutory rates, negating much of the supposed progressivity of income taxes. In turn, payroll taxes are also usually regressive, since in most countries they are capped, so that the average rate declines with the level of income.

The few assessments available of the incidence of taxes in Latin America tend to find a neutral or regressive effect. Gómez-Sabaini (2005) summarizes the findings of individual studies of ten Latin American countries. In eight of them the overall effect of the tax system is found to be regressive; in the other two it is approximately neutral. Those studies, however, use disparate methodologies, so that their results are not truly comparable across countries, and cover different time periods.

> 30 However, evidence shows that much of the benefit from reduced VAT rates accrues to the rich, due to their higher levels of expenditure; see Tanzi (2000) for discussion. On the other hand, the regressive effects of consumption taxes may be much reduced in an intertemporal framework, as already mentioned.

15
# **1. Introduction**

It has long been recognized in the literature on poverty measurement that people at different levels of living tend to hold different views about what “poverty” means.<sup>2</sup> The critical level of spending that a poor person would deem to be adequate in order to escape poverty is likely to be lower than the level a rich person would deem adequate to avoid becoming poor.

Does this economic gradient in the standards used to define poverty hold between countries, as well as within a given country? Ravallion, Datt and van de Walle (RDV) (1991) studied how poverty lines varied with mean consumption when both were converted to a common currency at purchasing power parity (PPP) (meaning that the currency conversion rate is intended to assure a common purchasing power over commodities). Amongst the poorest countries, poverty lines tend to be low, and they show little or no economic gradient. However, RDV also found that, above a critical level of mean consumption, the national poverty line tends to rise sharply with mean consumption, with an elasticity approaching unity in rich countries. It can thus be argued that absolute poverty (whereby the poverty line has constant real value) is the more relevant concept in poor countries, while relative poverty (in which the poverty line is proportional to the mean) is more salient in rich countries.

Why do national poverty lines have this economic gradient? Poverty lines are typically anchored to nutritional requirements, which tend to be similar between people in poor and rich countries. So differences in nutritional requirements are probably not the reason. More plausibly, as living standards rise generally, there is a change in the prevailing notions of what (food and non-food) consumption needs should be met if one is to not be deemed “poor;” people are expected to be able to afford more expensive calories (more meat and vegetables and higher quality foodgrains), have more varied diets, and be better clothed and housed. By this view, poverty is a socially-specific concept, whereby the consumption needs for escaping poverty in a given society depend on what people generally consume in that society.

How then should we judge the extent of poverty in the world as a whole? One might use the poverty lines that prevail in each country (or that one would expect given the country’s mean consumption). But then the resulting aggregate poverty measures would not be treating people at the same level of real consumption the same way. And by treating absolutely poor people

> 2 See, for example, Groedhart et al. (1977), Kapteyn, Kooreman and Willemse (1988) and Pradhan and Ravallion (2000).

2
(iv) _economic growth_ approximated by night light density; and (v) _previously regularized population_ measured as the number of applicants to past smaller regularization programs. These regularization programs only targeted highly educated migrants with passports in Colombia. These variables are listed in Table C.2 mentioned above. Equation (1) also includes municipal ( _γm_ ), election-year ( _γt_ ), and department election-year ( _γdt_ ) fixed effects. Finally, standard errors were clustered at the municipal level to account for geographic serial correlation.

# **V. A Internal validity**

Considering that there is no staggered treatment and all municipalities are treated at the same time, we begin by illustrating the validity of the parallel trend assumption for different specifications of the treatment variable. We explore potential violations of this assumption in the next section.

The canonical difference-in-difference estimates should be valid as long as municipalities with different PEP take-up rates experienced parallel dynamic behaviors in the outcomes examined before the implementation of the program in 2018 (after controlling for the baseline covariates). We examine the validity of the parallel trend assumption through an event study in Figures 2, 3, 4, and 5. The figures illustrate the coefficients of an event study that excludes the elections closest to 2018 for the five electoral outcomes studied. We estimate the event study for (i) the continuous treatment variable (PEP), defined as the standardized values of the variable PEP holders, and (ii) the discrete treatment variable equal to one if the municipality had positive program take-up. Generally, the figures suggest there are no differential trends in the outcome evolution before the implementation of the PEP program. In any case, we formally tested the sensitivity of our estimates to potential violations of the parallel trend assumption (see details in the next section). Our results are robust to all the tests employed.

20
improvement. After harsh debates and tough negotiations, agreements were reached finally: 1) the two restaurants shall be shut down or moved to somewhere else; 2) the lenders return the deposits of the restaurant owners. After the roundtable on May 26, the community workers and some residents in the community started looking for ways to help the two families. With help from the community workers, Mr. Ma started a spa, managed by his son, and Mr. Sun opened an iron shop, and they can earn enough income to survive. On June 24, 2008, the community workers organized the second dialogue meeting where some minor remaining issues were solved.

# **V. Survey of Dialogue Participants**

# **5.1. The Survey**

In order to evaluate the impacts and to improve the design and implementation of the dialogue programs, a survey was conducted in December 2007 of 192 individuals who had participated in the roundtable dialogues. The survey questionnaire included six sections: background information of individual’s participation in the dialogues, dialogue design and operation, information exchange, impact evaluation, program expansion, and personal information. The survey was developed in consultation with a number of dialogue participants and was conducted with assistance of an independent research institute in China and community workers of four municipalities (Chongqing, Tianjin, Chifeng and Shenyang) where the roundtable dialogues have been tested. About 200 questionnaires were distributed to all individuals who participated in the dialogues before through the community workers, and the completed questionnaires were returned to the research institute anonymously in postage paid envelopes. Simple multiple choice questions are used, in order to avoid potential difficulties for the respondents to complete the questionnaires.

# **5.2. Background of the Survey Participants**

Before the survey, about 82% of the respondents participated in the dialogue only once, 12% participated twice, and the remaining 6% participated in more than twice. 10% of the respondents were dialogue organizers, 15% were government representatives, 10% from the enterprises, 52% from the residents, and the remaining 13% from NGOs and media. 56% of the dialogues were related to enterprises’ pollution issues, 44% to garbage collection and 15
<!-- Start of picture text --> SAR EAP tac<br>sR& -10 =58 baS8 o<br>8 3° g<br>22 = -20 92 2 g Se3s2 nS<br>a 2g2 2<br>&<br>© -320 & - e a©<br>®<br>oS£z=10 3&==s L £#5oS ‘<br>50 2 410<br>O1fO-48) 0218-72) O4:[90-116) 5: 116 Q140-55) 2155-136) 4=[217-281) —Q5:>281 O1:[4-29) Q2:[28-39) —@4:[48-57) Q5:>57<br>Quintiles of fertilizer (kg/ha) Quintiles of fertilizer (kg/ha) Quintiles of fertilizer (kg/ha)<br>SSA ECA<br>MENA<br>= - o - 4 5<br>bed 2= 7 g<br>&3 2 ro2g S ¥] J,yJ \ \ Ey<br>& 2 as | \ 2<br>zZ& z<o * \\ T &z£ «5<br>5 2 —— &<br>£ 5 ¥ 2 —¢ 5<br># 2 i #&3<br>6 “10. -10<br>Q1:11-2) Q2:/2-3) 0413-8) 05:76) Q1{1-5) 25-8) 4-[11-28) O5:>28 Q10-22) 0222-38) 4:66-76) Q5:>76)<br>Quintiles of fertilizer (kg/ha) Quintiles of fertilizer (kg/ha) Quintiles of fertilizer (kg/ha)<br><!-- End of picture text -->
|P133079|2014|2016|12/23/2015|4 Closed|Gambia,The|
|---|---|---|---|---|---|
|P133079|2014|2016|6/22/2016|5 Closed|Gambia,The|
|P133079|2014|2017|12/20/2016|6 Closed|Gambia,The|
|P133079|2014|2017|6/29/2017|7 Closed|Gambia,The|
|P133079|2014|2018|1/5/2018|8 Closed|Gambia,The|
|P133079|2014|2018|6/21/2018|9 Closed|Gambia,The|
|P133079|2014|2019|8/30/2018|10 Closed|Gambia,The|
|P133107|2014|2019|5/9/2019|1 Closed|Sierra Leone|
|P133114|2014|2014|6/21/2014|1 Active|China|
|P133114|2014|2015|12/9/2014|2 Active|China|
|P133114|2014|2015|6/22/2015|3 Active|China|
|P133114|2014|2016|12/4/2015|4 Active|China|
|P133114|2014|2016|6/27/2016|5 Active|China|
|P133114|2014|2017|12/15/2016|6 Active|China|
|P133114|2014|2017|6/23/2017|7 Active|China|
|P133114|2014|2018|11/16/2017|8 Active|China|
|P133114|2014|2018|5/10/2018|9 Active|China|
|P133114|2014|2019|12/16/2018|10 Active|China|
|P133114|2014|2019|6/13/2019|11 Active|China|
|P133114|2014|2020|11/28/2019|12 Active|China|
|P133114|2014|2020|6/15/2020|13 Active|China|
|P133116|2015|2015|12/10/2014|1 Active|China|
|P133116|2015|2015|6/8/2015|2 Active|China|
|P133116|2015|2016|12/7/2015|3 Active|China|
|P133116|2015|2016|6/14/2016|4 Active|China|
|P133116|2015|2017|9/3/2016|5 Active|China|
|P133116|2015|2017|2/17/2017|6 Active|China|
|P133116|2015|2018|9/28/2017|7 Active|China|
|P133116|2015|2018|1/16/2018|8 Active|China|
|P133116|2015|2019|7/31/2018|9 Active|China|
|P133116|2015|2019|2/25/2019|10 Active|China|
|P133116|2015|2020|12/20/2019|11 Active|China|
|P133116|2015|2020|6/30/2020|12 Active|China|
|P133117|2015|2015|4/10/2015|1 Active|China|
|P133117|2015|2016|10/22/2015|2 Active|China|
|P133117|2015|2016|5/22/2016|3 Active|China|
|P133117|2015|2017|12/2/2016|4 Active|China|
|P133117|2015|2017|5/25/2017|5 Active|China|
|P133117|2015|2018|11/20/2017|6 Active|China|
|P133117|2015|2018|6/1/2018|7 Active|China|
|P133117|2015|2019|12/21/2018|8 Active|China|
|P133117|2015|2019|6/25/2019|9 Active|China|
|P133117|2015|2020|12/20/2019|10 Active|China|
|P133117|2015|2020|6/24/2020|11 Active|China|
|P133129|2015|2015|3/30/2015|1 Active|Argentina|
|P133129|2015|2016|9/4/2015|2 Active|Argentina|
|P133129|2015|2016|3/11/2016|3 Active|Argentina|
as a factor that may save a merger from being blocked.<sup>12</sup> Merger-specific efficiency gains are inferred from the information made available to the Commission.<sup>13</sup> _IMP_ reflects the Commission’s perception on the relevance of import competition. _EB_ denotes if the Commission finds high entry barriers in the relevant market. No quantitative measures of these entry determinants are provided, leaving one with the Commission’s view if entry barriers are present or not. As we would have expected, the value of _HIST, EQ_ and _EB_ increases as we move from left to right in Table I, indicating that there is a higher probability of being issued (either conditioned or blocked) as the value of these market concentration indicators increase.

The last group of variables _MKT_ and _FRG_ are the “other factors” that were regularly mentioned in the documents, but are not explicitly established in the merger provisions. _FRG_ indicates if a foreign firm is involved in the merger. _MKT_ is equal to one when the FCC mentioned that the post-merger combined market share of the participating firms is less than or equal to 25 per cent. We use 25 per cent as the critical level, since this is the level below which dominance is presumed not to exist, while 30% is the level below which dominance is presumed not to exist (Bergman _et al._ , 2005, p 726-727).<sup>14</sup> While _MKT_ is an indicator variable capturing market structure, _FRG_ has no _a-priori_ effect upon the FCC’s decision. However, simple descriptive statistics show that when a foreign firm was involved, most of the mergers were allowed.

12 According to the law, the efficiency gains must be accredited by the firms involved in the would-be merger. 13 While it would be preferable to have a direct estimate of the value of the cost savings, this information is not available. Instead, we define this dummy variable that takes a value of one when the efficiency argument was mentioned on the FCC’s resolutions.

> 14 Notice that _MKT_ and _HHI_ , although related, are conceptually different. While _HHI_ captures the concentration of the relevant market as a whole, _MKT_ picks up the relative importance of the firms involved in the merger. For some authors, the 25 percent share cut-off is to low. For instance, the US Merger Guidelines establish that the dominant firm cannot be presumed when the combined share of the merging parties is less than 35 percent (see US Merger Guidelines Section 2.22).

10
> In terms of our road quality variables, Table 11 shows that the impact of _paved_min_ is uniformly positive across sectors and is of comparable magnitude to our core elasticity estimate of 0.6

> (Table 9 column 7). _Paved_ave_ , on the other hand, displays much greater variation, and is not significant in most cases. Taking results for the two coefficients together, we conclude that trade flows in food, fuel, capital goods and transport equipment are particularly sensitive to road network quality, whereas industrial supplies and consumer goods are less so. Industrial supplies and capital goods are particularly sensitive to tariffs, while improved trade facilitation seems to be relatively important for food, transport equipment and consumer goods.

In sum, the above results disclose strong and consistent evidence to the effect that road network quality affects intraregional trade in ECA. We find that both the average and minimum levels of quality across transit countries are important, but our result is clearest in terms of the latter. We interpret this as suggesting that bottleneck effects and, by corollary, cross-country spillovers are important factors in determining intraregional trade. These results withstand numerous robustness checks, as well as estimation by individual sector (subject to cross-sectoral differences in the estimated elasticities of most variables).

# **6 Policy Simulations**

For the remainder of this paper, we will concentrate on the NB2 results reported in column 7 of Table 9. Under this specification, 1% improvements in _paved_ave_ and _paved_min_ are associated with trade increases of 0.8% and 0.6% respectively. By comparison, 1% reductions in tariffs and export/import documents are associated with 3.0% and 4.0% trade increases respectively (evaluated at the sample mean for tariffs).

- 18 -