rafmacalaba/datause-encoder-data huggingface dataset:
# **Trade Policy and Access to Intermediate Inputs: Quantifying the Welfare Costs of a Fertilizer Shortage**<sup>*</sup>

## Devaki Ghose<sup>†</sup> Eduardo Fraga<sup>‡</sup> Ana Fernandes<sup>§</sup>

Originally published in the Policy Research Working Paper Series in _December 2023_ . This version is updated in _April 2026_ .

To obtain the originally published version, please email prwp@worldbank.org.

_JEL Codes:_ D58; F13; F14; O13; Q17.

_Keywords:_ Trade, industrial policy, import ban, non-tariff measures, fertilizer, and agriculture.

*Eduardo is extremely grateful to Costas Arkolakis, Sam Kortum, Lorenzo Caliendo, and Ana Cecilia Fieler for their continuous support and guidance. We also thank Doug Gollin, Sebastian Sotelo, Heitor Pellegrina, Michael Peters, Bob Rijkers, Nuno Limao, Lauren Falcao Bergquist, Florence Kondylis, Treb Allen, David McKenzie, John Keyser, Gonzalo Varela, Athula Senaratne, Sheu Salau, Manoj Thibbotuwawa, Camille Reverdy, Daan van Soest, Kari Heerman, and Alejandro Forero for helpful discussions. We thank Mutlu Ozdogan for his work on the remote sensing estimates and Yewon Choi for assistance with Global Trade Alert data. The authors gratefully acknowledge support by the “Whole of Economy” Program, a Climate Support facility administered by the World Bank. We also thank the Umbrella Facility for Trade trust fund (financed by the governments of the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom) and the World Bank’s Research Support Budget for financial support. The findings, interpretations, and conclusions expressed in this paper are solely those of the authors and do not necessarily represent the views of the World Bank, its affiliated organizations, or the Executive Directors or the countries they represent. All errors are our responsibility.

> †Corresponding author, World Bank, DECRG. Email: dghose@worldbank.org

> ‡London Business School. Email: efraga@london.edu

> §World Bank, DECRG. Email: afernandes@worldbank.org
lanes and an increased number of regular buses. On the demand side, policy instruments included are higher fuel and parking pricing. The model represents the behavior of all relevant agents including households, producers (commercial enterprises) and the government. Travel cost includes various monetary costs to households including transit fares, expenditures on automobile fuel, possible congestion tolls levied on auto travel, and the costs of vehicle ownership as well as value of their time (e.g., wage rate). Households have a choice to live nearby their workplaces paying higher rents but avoiding costs of commuting, or they can live away from city centers with lower rental costs and real estate values but pay higher cost for commuting (including the value of time). Through a budget constraint, more spending on travel implies a trade-off as households have less money for other goods. Travel by each mode also involves a time cost, which again involves a trade-off as this reduces the amount of time people have available for other activities at home. Travel time per mile differs across modes, and reflects the inverse of the average travel speed for a transportation vehicle. The model is calibrated with data from Beirut and the economic implications of several urban transportation policies are simulated.

We study several policy packages. Policy package 1 introduces 120 Bus Rapid Transit (BRT) buses which will run on dedicated bus lanes in addition to 250 regular buses. It also includes a 25% increase in the parking tax. Policy package 2 is the same BRT but the parking tax increase is replaced by additional road lanes in suburban Greater Beirut. Policy package 3 includes building an international class ring road in suburban Greater Beirut accompanied by a doubling of the existing excise tax on gasoline. Policy simulation results show an improvement in traffic congestion and decreases in VMT and gasoline consumption across all three policy scenarios. Policy packages 1 and 2 show big gains in social welfare due to a significant increase in traffic speed under BRT. The cost-benefit ratio for each policy can be measured as a gain in social welfare in Lebanese pounds (LBP) per LBP of expenditure. While the cost-benefit ratio is 9.6 and 5.01 for Policy packages 1 and 2 respectively, the cost of implementing Policy package 3 outweighs its benefit.

There are a few existing studies for Beirut analyzing various transportation improvement scenarios such as the re-organization of the bus system and the implementation of bus rapid transit (e.g. DMJM & Harris and INI Group, 2003; IBI Group and TEAM, 2009). The existing studies are, however, limited to economics specific to the project activities, whereas the current study assesses the impacts to the entire city considering many factors, normally not included in a project 4
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# **PRIVATIZATION TRENDS AND RECENT DEVELOPMENTS**

## **I.   INTRODUCTION**

1. This paper takes stock of recent privatization trends, examines the extent to which government ownership is still prevalent in developing countries, and summarizes emerging issues in state enterprise restructuring and privatization going forward.  It shows that:

- Privatization activity for developing countries as a whole dropped off in the late 1990s and, while still at overall low levels, is slowly creeping back up towards the more typical levels prior to the sharp one-time spike in activity in 1997;

- Despite more than 15 years of privatization activity, government ownership is still prevalent in some regions and countries, and in certain sectors in virtually all regions;

- Despite recent evidence of declining public support for privatization, the evidence shows privatization’s resounding success in competitive sectors. In infrastructure the experience is more mixed, with positive outcomes achieved when private participation is combined with proper market structure, regulatory frameworks, and sound contract design;.

- Continued efforts need to be made to improve the performance of state-owned enterprises by: improving privatization policies and institutions; adopting more of a case-by-case approach for complex sectors and countries; and exposing state enterprises to market discipline by allowing new private entry and exit of unviable state-owned firms and improving their corporate governance.

2. The analysis in the paper uses estimated proceeds from privatization transactions that were carried out between 1990 and 2003 as an indicator of privatization activity. Proceeds are defined to include all monetary receipts to the government resulting from partial and full divestitures (via asset sales or sale of shares), concessions, leases, and other arrangements. As such the data do not cover the following: management contracts; new green field investments; investments committed by new private operators as part of concession agreements; and the vast numbers of transfers resulting from mass or “voucher” privatizations across Eastern Europe as these methods did not generate revenues for government.

3. Data were amalgamated from a variety of sources. For the earlier period, 1990 to 1999, data are drawn from the World Bank Privatization Database which provides the sale price of a privatization transaction and the year in which the privatization took place. As the sale price is recorded on an “announcement” basis rather than on the basis of actual receipts, proceeds do not necessarily reflect receipts in a particular year since transactions may be paid for over several years. Data for the more recent years, 2000 to 2003, are aggregated from the following sources: (i) the World Bank’s Private Participation in Infrastructure (PPI) database; (ii) the World Bank Africa region’s privatization database; (iii) OECD’s database on privatization in
countries (Fosu 1990). The fifth study (Helleiner 1986) finds no significant relationship.<sup>4</sup> All five studies use a single proxy for openness (i.e., export growth).

This paper attempts to shed light on the cross-country relationship between openness and performance by investigating it within a production-function framework. The paper adds to the empirical literature by departing from earlier cross-country analysis of openness-performance relationship in three ways. First it uses more appropriate policy based measures of1openness. Second it relies on four different measures of openness instead of a single measure. The use of several rather than a single measure is a distinct advantage since estimation results that are robust across several measures of openness are likely to be more convincing than those that are based on any single measure.<sup>5</sup> Third, unlike previous studies this paper uses fixed effects estimation with annual pooled data in addition to the usual cross-section estimation with period-average data.' The use of periodaverage data may obscure the significant changes in openness that occur over time. Since most countries of Sub-Saharan Africa have made substantial changes in commercial and exchange rate policies over the last decade, period-averages of any measure of openness is likely to be misleading. Moreover cross-section estimation fails to control for unobserved country-specific differences that can bias the coefficient estimates. By pooling annual time-series and cross-section data and using country dummies, the fixed effects model is able to overcome those problems.

The paper finds that differences in levels of or changes in openness accounts for significant cross-country differences in economic performance in Sub-Saharan Africa. This result (i.e., significant

> 4 Helleiner (1991) argues (a) that these studies (Moschos 1991, Fosu 1990) should not be viewed as evidence of positive openness-performance relationship for SSA because Lussier (1991) cannot find a positive result when he re-estimates the regression for SSA sample and (b) because they use outcome (i.e. export growth) as a proxy for trade polic) openness.

> 5 Given the problems with measures of openness cited in Pritchett (1990), it is necessary to use several measures instead of a single measure.

'Harrison (1991) is an exception.

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Finally, for the microfinance component, those aged 18 or older were eligible for loan sizes up to $100, repayable over a year, with a weekly repayment schedule and a 30% interest rate. Loans were renewable on repayment. The first loan cycle started in April 2015, with credit initially being disbursed to fewer than 10 women per village, and demanded loan sizes around $80.

There is recognized variation across villages in the extent to which they were impacted by the aggregate shock. Villages more severely impacted are those in which the economic and social disruptions described above were greater or longer lasting. For both men and women in more severely disrupted villages, there would have been a greater loss in economic opportunity, and thus less time to spend engaged in income generating activities.

ELA clubs then interact with the severity of the aggregate shock through two channels. First, by offering young women an alternative time use to socializing with men, ELA can reduce young women’s (voluntary) risk of pregnancy, or their involuntary exposure to gender-based violence or demands for sex. Second, ELA allows young women to invest into their human capital at a time when alternatives such as schools, were highly disrupted. The fact that ELA clubs provide different forms of human capital than what schools provide changes the relative returns across economic activities for young women. This might then alter the rates at which young girls transition towards engagement in income generating activities post-crisis.

There are strong interlinkages between the two channels: most directly, if ELA reduces the likelihood of pregnancy – either because it offers alternatives to spending time with men, or by the provision of life skills and knowledge on reproductive health that encourages contraceptive use – it is more likely beneficiaries can re-enrol when schools re-opened post-epidemic. This is especially so given the ban on pregnant girls being able to re-enrol post-crisis.

# **4 Data, Implementation and Research Design**

## **4.1 Data Sources**

Our data was collected before, during and after the Ebola outbreak. Figure 2 shows the timeline of data collection activities, and how these relate to the timing of the crisis, and ELA club openings/activities. Our evaluation takes place in four districts: Port Loko, Kambia, Moyamba and Pujehun, where 20% of the population resided pre-crisis. In preparation for our evaluation of ELA, in October 2013 we conducted a census in the 200 sample villages in these districts, covering 94 _,_ 338 individuals in 17 _,_ 233 households. This recorded information on demographics, education, occupation and dwelling and allows us to construct a pre-crisis poverty score for each household. This census was used to draw a sample of women aged 12 to 25 and thus eligible for ELA.

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- Hoddinott, J., Maluccio, J. A., Behrman, J. R., Flores, R., and Martorell, R. (2008). Effect of a nutrition intervention during early childhood on economic productivity in Guatemalan adults. _The Lancet_ , 371(9610):411–416.

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- Kazi, A. M., Ahsan, N., Khan, A., Jamal, S., Kalimuddin, H., Ghulamhussain, N., Wajidali, Z., Muqeet, A., Zaidi, F., Subzlani, M., et al. (2019). Personalized text messages and automated calls for improving vaccine coverage among children in Pakistan: Protocol for a community-based cluster randomized clinical trial. _JMIR Research Protocols_ , 8(5):e12851.

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# _Scientist_ 6: 76-79.

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# BOX **V3:** Public **Expenditure** Planning in **Botswana**

The analysis of Botswana's public expenditure plan in the 1986 PER is facilitated by a strong national accounts data base and the country's welldeveloped administrative apparatus. Preparation of the sixth National Development Plan (1986-91) began with the preparation of sector policy papers by each ministry. These documents presented the ministry's view on policy issues and on specific problems within its purview. The papers were discussed by the entire Cabinet of the government, and sectoral allocations of recurrent and development spending were made within the context of guidPlines for overall expenditure growth.

Once the recurrent and capital expenditure ceilings were fixed, ministries were asked to prioritize objectives within the budget ceiling. Spending on low priority activities was maintained constant in real terms. Departments providing services to the public were allocated increased resources at least consistent with the rate of population growth (3.7 percent). High rates of spending growth were determined for several sectors including education, reflecting the governrnent's stated commitment to basic education and to alleviating the economic constraint imposed by a lack of trained manpower. The recurrent cost implications of each project were spelled out, as were the recurrent cost implications of each ministry's investment program. Ceilings on capital expenditure limit only those projects with recurrent cost implications. Other self-liquidating capital expenditures were considered within the context of overall resource availability.

The Plan includes four budget scenarios, a base case and three less optimistic alternatives that are designed to test whether policy actions, in particular new revenue measures, would be needed under less favorable conditions. The Bank mission reviewed the scenarios and found that several of the assumptions of the base case had become less plausible over time. The Bank presented a fifth scenario that is more optimistic than the country's most favorable (base) scenario. The report, while commenting favorably on the budget preparation and review process, makes several recommendations for improvement: the recurrent cost implications of existing as well as proposed investments should be evaluated and justified; foreign assistance should be itemized by project; and financing for parastatals (even nongovernmental funding) should be indicated separately.

5.28 Several reports recommend increased cost recovery but do no mention the equity implications. Much attention is paid, however, to a more equitable intrasectoral distribution of resources through greater cost recovery (user fees), proposed in threequarters of all reports. The reconimendations for cost recovery at the primary level vary: some reports support it, while others suggest its elimination. In Haiti, parental 49
any other region except Sub-Saharan Africa.<sup>4</sup> On average, in the MENA countries, 34 percent of firms indentified access to finance as major constraint to economic activities.<sup>5</sup> For countries such as Algeria and Lebanon, this constraint is even more severe (50%<sup>6</sup> and 42%<sup>7</sup> ), for others, such as Oman (25%<sup>8</sup> ), the constraint is lower, but a barrier to business activities nonetheless. Improving secured transactions regimes has helped alleviate this constraint in other countries and can reasonably be expected to do the same for the MENA countries.

**Insufficient Suitable Collateral is Among the Top Reasons for Difficulty in Accessing Finance** _._<sup>_9_</sup> Firm level surveys conducted in developing countries help explain why obtaining finance is difficult. A common trend among the firms indicates that credit applications are mostly rejected due to insufficient collateral, i.e. unacceptable or unsuitable collateral. In many cases, business owners did not even bother applying for loans, because they were certain that they could not meet the collateral requirements often requested by banks.<sup>10</sup> As illustrated by the table below, more than 80% on average of the loans granted in MENA by financial institutions require some type of collateral. An in-depth analysis indicates that availability of collateral is frequently not the source of the problem; it is the ability of translating valuable assets into productive use. While in the developing world 78% of the capital stock of a business enterprise is typically movable assets such as machinery, equipment or receivables and only 22% immovable property, financial institutions are reluctant to accept movable property as collateral. Banks heavily prefer land and real estate as collateral (suitable collateral).<sup>11</sup> This dichotomy is clearly present in the MENA region, where the gap is the lack of reliable frameworks for financial institutions to accept more movable property as collateral.

> 4 See World Bank Group Enterprise Surveys

> 5 Based on the latest datasets available on www.enterprisesurveys.org on the date of access (February 10, 2010)

> 6 Enterprise Surveys, 2007

> 7 Enterprise Surveys, 2006

> 8 Enterprise Surveys, 2003

> 9 See ―Secured Transactions Systems and Collateral Registries‖, Chapter 1:  Economic Rationale, World Bank Group, January 2010

> 10 See ―Reforming Collateral Laws to Expand Access to Finance‖ Fleisig, Safavian, De La Pena, 2006.

> 11 ―Reforming Collateral Laws to Expand Access to Finance‖ Fleisig, Safavian, De La Pena, 2006.

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