rafmacalaba/datause-encoder-data huggingface dataset:
Liquidity needs and vulnerability to
            financial udnerdevelopment
The author provides evidence of a causal
            and economically important effect of financial development
            on volatility. In contrast to the existing literature, the
            identification strategy is based on the differences in
            sensitivities to financial conditions across industries. The
            results show that sectors with larger liquidity needs are
            more volatile and experience deeper crises in financially
            underdeveloped countries. At the macroeconomic level, the
            results suggest that changes in financial development can
            generate important differences in aggregate volatility. The
            author also finds that financially underdeveloped countries
            partially protect themselves from volatility by
            concentrating less output in sectors with large liquidity
            needs. Nevertheless, this insulation mechanism seems to be
            insufficient to reverse the effects of financial
            underdevelopment on within-sector volatility. Finally, the
            author provides new evidence that: 1) Financial development
            affects volatility mainly through the intensive margin
            (output per firm). 2) Both the quality of information
            generated by firms, and the development of financial
            intermediaries have independent effects on sectoral
            volatility. 3) The development of financial intermediaries
            is more important than the development of equity markets for
            the reduction of volatility.
Achieving the Millennium Development
            Goals : The role of infrastructure
The authors provide an empirical
            analysis of the determinants of three child-health outcomes
            related to the Millennium Development Goals: the infant
            mortality rate, the child mortality rate, and the prevalence
            of malnutrition. Using data from Demographic and Health
            Surveys, they go beyond traditional cross-country
            regressions by exploiting the variability in outcomes and
            explanatory variables observed within countries between
            asset quintiles. The authors show the relationships existing
            between the prevalence of diseases (diarrhea and
            malnutrition) and mortality. Their findings suggest that
            apart from traditional variables (income, assets, education,
            and direct health interventions), better access to basic
            infrastructure services has an important role in improving
            child health outcomes. Their analysis of interaction effects
            between interventions also suggests the importance of
            combining interventions to meet the Millennium Development Goals.
Is inequality in Africa really
            different : Is inequality in Africa really different
High inequality in Africa is something
            of a paradox: Africa should be a low-inequality continent
            according to the Kuznets hypothesis (because African
            countries are poor and agriculture-based), and also because
            land (the main asset) is widely shared. The author's
            hypothesis is that African inequality is politically
            determined. Yet in the empirical analysis, despite the
            introduction of several political variables, there is still
            an inequality-increasing "Africa effect" linked to
            ethnic fractionalization. The politics, however, may work
            through ethnic fractionalization, which provides an easy and
            secure basis for the formation of political groups. Although
            this is a plausible explanation, it is not fully
            satisfactory, and the author criticizes it in the concluding section.
The use of "asset swaps"
            by institutional investors in South Africa
Leading financial economists have
            proposed the use of international asset swaps (Merton 1990,
            Bodie and Merton 2002) as a way of efficiently achieving
            international diversification without eroding the level of
            foreign exchange reserves and weakening local market
            development. International asset swaps entail limited
            foreign currency flows (only net gains or losses need to be
            exchanged). They protect foreign investors from market
            manipulation and expropriation risk and have much lower
            transaction costs than outright investments. But asset swaps
            are constrained by the attractiveness of local markets to
            foreign investors, and by various regulatory issues covering
            counterparty risk and collateral considerations, and
            accounting, valuation, and reporting rules. Institutional
            investors are well developed in South Africa. Their total
            assets corresponded in 2001 to 159 percent of GDP, a level
            that was surpassed by only four high-income countries. But
            because of the imposition of exchange controls, they lacked
            international diversification. In July 1995 South Africa was
            the first developing country that explicitly allowed its
            pension funds and other institutional investors to make use
            of "asset swaps." But the South African
            authorities did not authorize the use of properly specified
            swap contracts as described by Bodie and Merton, but rather
            permitted institutional investors to "obtain foreign
            investments by way of swap arrangements." As the author
            argues in this paper, the asset swap mechanism turned out to
            be cumbersome and inefficient. However, it did allow
            institutional investors to attain some level of
            international diversification. Other developing countries
            should consider authorizing their institutional investors to
            engage in international asset swaps. But they should
            authorize the use of properly designed swap contracts,
            preferably based on baskets of liquid securities, permit
            only global investment banks to act as counterparties,
            require the use of global custodians, properly monitor
            credit risk, maintain adequate collateral, and adopt
            market-to-market valuation rules. Asset swaps are clearly a
            second-best option compared to the lifting of exchange
            controls. However, they may facilitate risk diversification
            in the presence of such controls. And they may even have a
            role to play in their absence.
The use of "asset swaps"
            by institutional investors in South Africa
WPS3175

### **Financial Sector Development World Bank**

# **The Use of “Asset Swaps” by Institutional Investors in South Africa**

## **Dimitri Vittas**

#### World Bank Policy Research Working Paper 3175, December 2003

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Policy Research Working Papers are available online at http://econ.worldbank.org._
International migration,
            remittances, and poverty in developing countries
Few studies have examined the impact of
            international migration and remittances on poverty in a
            broad cross-section of developing countries. The authors try
            to fill this gap by constructing a new data set on poverty,
            international migration, and remittances for 74 low- and
            middle-income developing countries. Four key findings
            emerge: 1) International migration-defined as the share of a
            country's population living abroad-has a strong,
            statistical impact in reducing poverty. On average, a 10
            percent increase in the share of international migrants in a
            country's population will lead to a 1.9 percent decline
            in the share of people living in poverty ($1.00 a person a
            day). 2) Distance to a major labor-receiving region-like the
            United States or OECD (Europe)-has an important effect on
            international migration. Developing countries that are
            located closest to the United States or OECD (Europe) are
            also those countries with the highest rates of migration. 3)
            An inverted U-shaped curve exists between the level of
            country per capita income and international migration.
            Developing countries with low or high per capita GDP produce
            smaller shares of international migrants than do
            middle-income developing countries. The authors find no
            evidence that developing countries with higher levels of
            poverty produce more migrants. Because of considerable
            travel costs associated with international migration,
            international migrants come from those income groups which
            are just above the poverty line in middle-income developing
            countries. 4) International remittances-defined as the share
            of remittances in country GDP-have a strong, statistical
            impact in reducing poverty. On average, a 10 percent
            increase in the share of international remittances in a
            country's GDP will lead to a 1.6 percent decline in the
            share of people living in poverty.
Does infrastructure reform work for
            the poor A case study from Guatemala
Following the 1996 Peace Accords,
            Guatemala embarked on a major program of infrastructure
            reform involving the restructuring and privatization of the
            electricity and telecommunications sectors and a substantial
            increase in infrastructure investments partially financed by
            privatization proceeds. As a result, the pace of new
            connections to electricity, water, and sanitation services
            increased by more than 40 percent. Moreover, households in
            traditionally excluded sectors-the poor, rural, and
            indigenous populations-were twice as likely to be the
            beneficiaries of a new infrastructure connection than they
            had been prior to the Peace Accords. The teledensity index
            increased by a factor of five from 4.2 in 1997 to 19.7 in
            2001, largely because of the growth in cellular telephones,
            which now outnumber fixed lines. The number of public
            telephones in rural areas increased by 80 percent since the
            Peace Accords, so that 80 percent of rural households are
            now within six kilometers from a public telephone. Although
            real electricity tariffs increased by 60-80 percent
            following the reform, residential consumers have been
            shielded by a "social tariff" policy that has kept
            charges at pre-reform levels. This policy, which costs US$50
            million a year, does little to benefit poor households. The
            reason is that 60 percent of poor households are not
            connected to the electricity network, and those that are
            consume modest amounts of electricity and hence capture only
            10 percent of the total value of the subsidy. In contrast,
            poor households without access to electricity pay about
            US$11 a kilowatt-hour (or 80 times the electricity tariff)
            to light their homes with candles and wick lamps. The
            resources used to finance the "social tariff"
            would therefore be better used in further accelerating the
            pace of new connections for currently underserved households.
Committing to civil service reform :
            the performance of pre-shipment inspection under different
            institutional regimes
If the only solution tried for customs
            corruption and evasion in a developing country is to
            outsource certain customs functions to a pre-shipment
            inspection (PSI) company, PSI will prove more of a fiscal
            burden than a panacea. PSI works best in countries where the
            customs service already performs fairly well-by reducing the
            costs of catching evaders. Typically a developing
            country's customs service brings in a large share of
            its revenues and accounts for an even larger share of its
            corruption. One prescription popular among development
            agencies for reducing corruption and customs evasion by
            importers has been to outsource certain customs functions to
            pre-shipment inspection (PSI) companies. More than 35
            countries employ PSI as a second-best solution to corruption
            in customs collection. But whether PSI companies are an
            effective alternative to comprehensive civil service reform
            has been widely questioned. The success of PSI contracts
            depends on the institutional environment-the formal and
            informal rules of enforcement that affect different
            agents' incentives-but the reasons for PSI's
            success or failure in different institutional settings have
            not been well understood. Johnson presents a simple model
            highlighting the principal-agent problems in a typical PSI
            contract. Based on his conclusions, he suggests that PSI
            should be thought of less as a second-best alternative to
            customs reform (in countries where the customs service
            performs poorly) than as a cost-effective complement to
            reforms in "intermediate" cases (countries where
            the customs service already performs fairly well). PSI could
            help in these intermediate cases by reducing the costs of
            catching evaders. This would make it easier for the ministry
            of finance to maintain separate reforms to eliminate
            corruption between customs and importers. In countries where
            the customs service is powerful-is highly independent and
            controls the country's borders-and where the government
            does not have the institutional ability to put through the
            complementary reforms essential for using PSI successfully,
            introducing a PSI contract will add to the burdens of public
            finance rather than provide the hoped-for panacea.
Contractual savings, capital
            markets, and firms' financing choices
The authors analyze the relationship
            between the development and asset allocation of contractual
            savings and firms' capital structures. The authors
            develop a simple model of firms' leverage and debt
            maturity decisions. They illustrate the mechanisms through
            which contractual savings development may affect corporate
            financing patterns. In the empirical section, the authors
            show that the development and asset allocation of
            contractual savings have an independent impact on
            firms' financing choices. Different channels are
            identified. In market-based economies, an increase in the
            proportion of shares in the portfolio of contractual savings
            leads to a decline in firms' leverage. In bank-based
            economies, instead, an increase in the size of contractual
            savings is associated with an increase in leverage and debt
            maturity in the corporate sector
Exchange rate appreciations, labor
            market rigidities, and informality
This paper works at the interface of the
            literature exploring the raison d'etre of the informal
            labor market and that explaining the real exchange rate
            appreciations occurring in many Latin American countries
            during periods of reform. The authors first build a small
            country-Australian style model where the informal sector is
            seen as an unregulated non-tradables sector, augmented by
            heterogeneity in entrepreneurial ability and capital
            adjustment costs. They then examine the behavior of the
            model with and without a formal sector rigidity. It shows
            that the co-movements of relative formal/informal incomes,
            formal/informal sector size, and the real exchange rate can
            offer insight into the level of distortion in the labor
            market and the source of exchange rate fluctuations. The
            paper then explores time series data from Brazil, Colombia
            and Mexico using multivariate co-integration techniques to
            establish what "regime" each country is in at
            various periods of time. Mexico appears to be relatively
            undistorted and the 1987-92 appreciation appears to be
            largely a function of a boom in the non-tradables sector
            rather than wage inertia. In spite of a secular expansion of
            the informal sector there is little evidence of dualism or
            of a rigidity driven appreciation of the Real, from
            1993-1996. Post 1995 Colombia corresponds to a classic
            segmented labor market and an appreciation partly driven by
            labor market rigidities. Graphical analysis suggests that
            neither the Argentine appreciation (1988-1992) or the
            celebrated Chilean appreciation (1975-1982) were driven by
            inertial forces
Exchange rate appreciations, labor
            market rigidities, and informality
WPS2771

**Exchange Rate Appreciations, Labor Market Rigidities, and Informality**<sup>**•**</sup>

Norbert M. Fiess<sup>∗</sup> Marco Fugazza<sup>°</sup> William Maloney<sup>∗</sup> The World Bank February 2002

**Abstract:** This paper works at the interface of the literature exploring the raison d’etre of the informal labor market and that explaining the real exchange rate appreciations occurring in many Latin American countries during periods of reform. We first build a small country-Australian style model where the informal sector is seen as an unregulated non-tradables sector, augmented by heterogeneity in entrepreneurial ability and capital adjustment costs.  We then examine the behavior of the model with and without a formal sector rigidity. We show that the co-movements of relative formal/informal incomes, formal/informal sector size, and the real exchange rate can offer insight into the level of distortion in the labor market and the source of ER fluctuations.  We then explore time series data from Brazil, Colombia and Mexico using multivariate co-integration techniques to establish what “regime” each country is in at various periods of time. Mexico, for instance, appears to be relative undistorted and the 1987-92 appreciation appears to be largely a function of a boom in the non-tradables sector rather than wage inertia.  In spite of a secular expansion of the informal sector and there is little evidence of dualism or of a rigidity driven appreciation of the Real, from 1993-1996.  Post 1995 Colombia corresponds to a classic segmented labor market and an appreciation partly driven by labor market rigidities. Graphical analysis suggests that neither the Argentine appreciation (1988-1992) or the celebrated Chilean appreciation (1975-1982) were driven by inertial forces.

> • This work partially financed by the Regional Studies Program of the Office of the Chief Economist for Latin America and the Caribbean.  The development of the conceptual framework  was supported by the Franco-Italian Foundation for Theoretical Philanthropy.  We are grateful to Rashmi Shankar for early conceptual discussions, to Leonardo Gaspirini for helpful comments, to Norman Loayza and Claudio Montenegro for help with data, and to Gabriel Montes for expert research assistance.  Corresponding author: wmaloney@worldbank.org.

> ∗ The World bank

> ° CERAS, Ecole Nationale des Ponts et Chaussées
A little engine that could: domestic
            private companies and Vietnams pressing need for wage
            employment : A little engine that could: domestic private
            companies and Vietnam�s pressing need for wage employment
Vietnam's young private sector is
            growing fast. Crucial to this growth has been a policy
            environment that increasingly recognizes the importance of
            private entrepreneurship-particularly its potential to help
            address the country¹s pressing need for significantly
            increased wage employment creation. Expanding the benefits
            of private sector growth beyond urban centers out into the
            rural areas where most Vietnamese live-and where poverty and
            underemployment are heaviest-will require significantly
            increased information flows on what is working and what is
            not. This paper presents an objective picture of
            Vietnam's emerging private sector, two years after
            initial implementation of the country's much praised
            Enterprise Law. The country's private companies are
            significantly better off than they were just a couple years
            earlier, when regional economic recession and stagnation on
            domestic policy reforms had brought development of the
            formal private sector to a near standstill. At the same
            time, the sector's small base means that its impressive
            rates of job creation still fall far short of matching the
            booming growth of the overall work force. Information for
            this paper is based on data collected from Vietnam's
            General Office of Statistics, a small number of individual
            company case studies, and a national firm-level survey
            designed and implemented by the authors. Research for the
            paper revealed significant gaps in available private sector
            data and flaws in current data gathering
            methodologies-calling into question the ability of policy
            makers and advisors to understand rapid, ongoing economic
            developments and make appropriate and timely policy
            decisions. The authors hope that this paper can serve as a
            starting point and an impetus for more targeted research
            aimed at identifying and addressing specific obstacles to
            sustainable and broad based job and wealth creation.