rafmacalaba/datause-encoder-data huggingface dataset:
in which trade transactions take place. This includes regulatory transparency and professionalism of customs, harmonization of standards, and use of information technology in trade, for example. All these factors relate to ‘trade facilitation’ and politicians as well as researchers are shifting the focus of trade facilitation efforts inside the border to domestic policies and institutional structures where capacity building can play an important role.<sup>5</sup> An increasingly important policy question in trade centers on estimating the impact on trade of capacity building projects and relative impact of differing policy reform agendas on competitiveness. Wilson, Mann, and Otsuki (WMO) (2004) find that enhanced capacity in global trade facilitation would increase world trade of manufacturing goods by approximately $377 billion dollars – an increase of about 9.7 percent. This is based on a scenario in which capacity building is raised half-way to the global average across 75 countries. The authors specifically examine four areas: Port Efficiency, Customs Environment, Regulatory Environment (which includes standards), and Information Infrastructure. They find that the improvement in Port Efficiency results in about $106.9 billion (equivalent to 2.8% of total world trade) increase in trade, whereas improvements in Customs Environment results in about $32.9 billion (0.8 percent) increase in trade. The increase in trade from the improvement in the Regulatory Environment is estimated in about $83.3 billion (2.1% of total world trade). The largest trade increase comes from improvements in services sector infrastructure and e-business usage ($154 billion, 4.0 percent of total trade). WMO (2004) also find that the increments in trade from export improvement in trade facilitation more than double those coming from the impact of imports on trade.

These results suggest, in general, that increased capacity to comply with GATT Article V (freedom of transit), Article VIII (fees and formalities connected with importation and exportation), and Article X (publication and administration of trade regulations) along with other reforms could raise global trade for all WTO members.

For the case of Mexico, WMO (2004) estimated that greater exports coming from improvements in all trade facilitation measures could be on the order of $17.3 billion. The aggregate nature of the WMO study does not provide for estimates of whether higher exports levels are equally spread among all industrial sectors or are concentrated in a few industry

> 5 A good example of this is the Colloquium on Public Policy Innovations organized by IBERGOP-Mexico in 2004. A clear result from it is that something beyond lowering tariffs and pursuing Free Trade Agreements should be done by Mexico to face the challenges in the world markets. See IBERGOP,2004.

3
Policy Research Working Paper 6252

# **Abstract**

One of the important factors for economic development is the existence of an effective tax system. This paper deals with the concept and empirical estimation of countries’ taxable capacity and tax effort. It employs a cross-country study from a sample of 110 developing and developed countries during 1994–2009. _Taxable capacity_ refers to the predicted tax-to-gross domestic product ratio that can be estimated empirically, taking into account a country’s specific macroeconomic, demographic, and institutional features, which all change through time.

_Tax effort_ is defined as an index of the ratio between the share of the actual tax collection in gross domestic product and taxable capacity. The use of tax effort and actual tax collection benchmarks allows the ranking of countries into four different groups: low tax collection, low tax effort; high tax collection, high tax effort; low tax collection, high tax effort; and high tax collection, low tax effort. The analysis provides broad guidance for tax reforms in countries with various levels of taxable capacity and revenue intake.

This paper is a product of the International Trade and Investment Unit, Investment Climate Department. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. The author may be contacted at bmorenododson@worldbank.org.

_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 views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent._ Produced by the Research Support Team
22 model is providing such an accurate measure. In effect, the regulators 'piggyback' on a bank's existing risk-management model to determine levels of risk capital to be held. At the heart of this approach lies the VAR model described above.

# _IV 2.2. The IMA Process_<sup>_3 8_</sup>

Setting capital adequacy standards under this regime is a three-stage process. Firstly, the regulators set the quantitative standards (risk parameters) for capital calculation which are the following39:

- the model must cover all material risks in the trading book and must have a minimum number of thirteen (six for United States banks, under the corresponding Fed proposal) risk factors (maturity bands). Moreover, it must be able to account for the non-linear pricing characteristics of option instruments;

- a 99% one-sided 'conservative' confidence interval, in order to account for adverse movements only. This amounts to a risk estimate of three standard deviations away from the mean of a normal distribution of portfolio value changes;

- a ten trading-day (that is, two weeks) holding period. This has been imposed to extend the period sufficiently to be of interest to regulators, and can be justified by appealing to concerns about illiquidity and the inability to wind down positions during extreme market movements;

- a minimum of one year as the observation period for historical data to be used in calculating volatility, to be updated at least once a quarter. This is intended to resolve problems of differential volatilities and correlations arising from the choice of the size of the sample period;

- all correlations are allowed, both within and across different asset classes (risk categories), to be estimated with equally-weighted daily data;

38 See the _Federal Register (25_ July 1995) for a more detailed description of the BSM and the BIMA as proposed to be applied to the United States.

39 Quantitative standards were placed in an attempt to make consistent estimates across institutions. This was in response to important differences in model practice, identified when the Basle Committee compiled and distributed a test portfolio to fifteen banks in the major G-10 countries in order to get their VAR estimates. Moreover, the standards aim to address some overall measurement shortcomings. See _Basle Committee on Banking Supervision_ (April 1995).
4.4 percent, 8.8 percent and 22.9 percent more likely to be home-based workers in Mexico, Brazil, and Ecuador, respectively.<sup>20</sup> The results also support the qualitative findings that those with greater domestic responsibilities are more likely to engage in home-based work, namely women with household responsibilities and older individuals. Unambiguously, women with household constraints are more likely to be home-based workers than are women who do not have spouses or children (Columns 3 in Tables 5a-5c).<sup>21</sup> In Brazil and Mexico married women are approximately three percent more likely to work from their home than are unmarried women. In Ecuador, the coefficient is positive, but not significant, possibly due to the small sample size.<sup>22</sup> With respect to children, Mexican and Brazilian women with children age 0-5 ( _presch_ ) were about two percent more likely to be homebased workers than were women without young children in their households and those with children age 6-12 ( _elemsch_ ) were 1.0 percent more likely to be home-based workers. In Ecuador, the coefficient estimate on children age 0-5 is positive and significant at the 10 percent level, thereby weakly suggesting that these women are six percent more likely to be home-based workers. Men, on the other hand, show weak tendencies for homebased work as a result of household characteristics: their participation in home-based work is uncorrelated or negatively correlated with marriage and the presence of young children.

> 20 In Mexico and Ecuador, these likelihoods increased between 1994 (1995 for Ecuador) and 1999 while in Brazil, the probability fell.

> 21 Coefficient estimates on interaction terms of _sex_ and _married_ , _sex_ and _presch_ , and _sex_ and _elemsch_ in the pooled sample are highly significant and greater than zero for the Mexico and Brazil data, but not for Ecuador, with its much smaller sample size.

> 22 Using 1995 data from Ecuador, despite the small sample size, Ecuadorian married women were 6.9 percent more likely to be home -based workers; the coefficient was statistically significant at the 5% level.

19
Table 5-1. City Size Growth Equation<sup>a,b,c</sup> (robust standard errors in parentheses)

||(1)|(2)|(3)|(4)|
|---|---|---|---|---|
||GMM-IV|OLS|GMM-IV|OLS|
|Δ Ln(ruralpop. supplymarket|9.188***|3.216***|9.429***|3.064***|
|potential)|(2.309)|(0.892)|(2.410)|(0.631)|
|Δ Ln(rural income opportunities:|0.756|0.364|0.358|0.198|
|marketpotential)|(0.883)|(0.517)|(0.728)|(0.317)|
|Δ Ln(marketpotential)|2.294***|2.860***|1.284**|2.738***|
||(0.761)|(0.798)|(0.512)|(0.551)|
|Average schooling (t-1)|0.078***|0.021|0.071***|0.021|
||(0.021)|(0.014)|(0.013)|(0.012)|
|Δ Average schooling|0.275*|0.067*|0.384***|0.097***|
||(0.141)|(0.033)|(0.104)|(0.033)|
|Δ Ln(inter-citytransport costs)|-0.078**|-0.092**|-0.089***|-0.088**|
||(0.035)|(0.037)|(0.026)|(0.037)|
|state capital dummy|0.016|0.080***|0.154***|0.129***|
||(0.036)|(0.024)|(0.035)|(0.037)|
|Ln(population) (t-1)|||-0.047***|-0.018*|
||||(0.009)|(0.010)|
|Manu / service(t-1)|||0.140***|0.096***|
||||(0.027)|(0.019)|
|time dummies|Yes|Yes|Yes|Yes|
|Observations|246|246|246|246|
|R<sup>2</sup>||0.364||0.403|
|Hansen J statistic<br>(overidentificationtest)|5.786||8.204||
|(p-value)|(.565)||(.514)||
|Average of Partial R<sup>2</sup>|.412||.526||
|Average of Partial F's|395.70||2852.4||

*** significant at 1% level; ** significant at 5% level; * significant at 10% level.

- a. For (1), instruments are the IV list of Table 4, ln(distance to São Paulo), ln(transport costs to São Paulo, 1968), and ln(transport costs to state capital, 1968). For (3), we drop ln(industry capital per worker, 1970) from (1), and add ln(population, 1970), manu/service ratio (1970), manu/service ratio(1970)*ln(population, 1970), manu/service ratio(1970)*ln(income per capita, 1970), and manu/service ratio(1970)*ln(market potential, 1970).

- b. GMM estimates are from the two-step efficient GMM in the presence of arbitrary heteroskedasticity and arbitrary intra-group (within-state) correlation.

- c. OLS regressions are with robust cluster standard errors. We assume the observations may be correlated within states, but would be independent between states.

34
# **4. Data, Methods and Selection**

# **4.1. Data**

The data are from the Tongan component of the first (and to date only) wave of the Pacific Islands-New Zealand Migration Survey (PINZMS), which measures multiple impacts of migration.<sup>11</sup> The PINZMS survey was designed and implemented by the authors in 200506 to allow study of migration through the Pacific Access Category, surveying applicants in the first four years of the PAC. The survey also covered random samples of non-applicants to enable comparisons between applicants and non-applicants.

The survey includes questions on household demographics, education, labor supply, income, asset ownership and diet, self-reported health status, smoking and alcohol use, and anthropometric measurements of height and weight for all individuals, and waist and hip circumference and blood pressure for adults. It also measures mental health for individuals aged 15 and older using the Mental Health Inventory 5 (MHI-5) of Veit and Ware (1983).

In a perfect randomized experiment, the impact of the treatment (here, having some household members emigrate) could then be obtained via a simple comparison of means in these two groups. However, mean comparisons may be biased if control group members substitute for the treatment with a similar program or if treatment group members drop out (Heckman, et al, 2000). For example, _substitution_ bias will occur if PAC applicants who are not drawn in the ballot migrate through alternative means and _dropout_ bias will occur if PAC applicants whose name are drawn in the ballot fail to migrate to New Zealand. Substitution bias is not of serious concern; the low odds of winning the ballot and the limits on eligibility for other migration channels available to Tongans mean that those with the ability to migrate via other arrangements would likely have done so previously. But dropout bias is a more relevant concern because approximately 15 percent of ballot winners do not ultimately move to New Zealand.

To adjust experimental estimates for possible dropout bias we use three subsets of the PINZMS sample (see Appendix Table 1): (i) 61 households, with 283 individuals, in Tonga with some previous members now PAC migrants in New Zealand; these are the “treatment” group, (ii) 26 households, with 115 individuals, containing successful participants from the same PAC ballots who were still in Tonga; these “non-compliers” had not moved when

> 11 Further details about this survey and related papers produced from these data can be found at <u>www.pacificmigration.ac.nz.</u>

11
3 Next, many countries have experienced “premature” _deindustrialization_ (Rodrik, 2016), due to the removal of import substitution industrialization (ISI) policies adopted by nations to the 1980s or increased trade due to trade liberalization many up competition or rising productivity related to advances in automation in some nations. We discuss why “premature” _deindustrialization_ may not lead to de-urbanization. However, since the country experiences deindustrialization, its cities do so as well.

Using GJV16’s sample of 116 developing countries (as of 1960) and long-difference and panel regressions for the period 1960-2020, we first show that: (i) higher urban shares are found in countries with higher GDP shares of manufacturing & services, a proxy for industrialization broadly defined (including tradable services); (ii) countries exporting natural resources, whether fuel & mining products _or_ agricultural products, are also more urbanized; and (iii) urban shares are unchanged in deindustrializing countries.

Second, we take advantage of newly available data, including IPUMS census microdata for about 60 countries over time and I2D2 household and labor force survey data for about 90 countries over time, to examine the correlations between the sectoral structure of urban areas and industrialization, resource exports, and deindustrialization.<sup>3</sup> We study sectors not covered in GJV16 and informality, use panel regressions, and identify which parts of the city size distribution are affected by the structural change mechanisms mentioned above. Cities in industrialized countries have more in tradables and more while cities in resource- employment wage employment, rich and deindustrializing countries have higher shares of non-tradables and selfemployment. Differences between industrialized, resource-rich, and deindustrializing countries are stable across city sizes. Thus, the origin of the urbanization process also impacts the largest cities, hence countries’ “engines of growth” (World Bank, 1999, 2009).

Third, focusing on the mechanisms, we take advantage of novel data on urban construction across countries to shed light on the “quality” of spending in cities. For example, we explore whether the spending of resource rents in cities might have led to “white elephant” projects. We make use of a remarkable data set that inventories all the world’s tall buildings – whose height is above 80 meters – with information on their year of construction and height. Long-difference and panel regressions suggest that exporting

> 3The _International Income Distribution Database_ (I2D2) of the World Bank’s _World Development Report_ unit consists of 1,500 individual-level household/labor force surveys. Details will be provided in Section 4..
Table 1. Basic statistics (public schools)

||Non-co|ncession|Conc|ession|
|---|---|---|---|---|
||Mean|Std. Dev.|Mean|Std. Dev.|
|A. CHARACTERISTICS<br>Localization|||||
|1|0.10|0.30|0.12|0.33|
|2<br>|0.01<br>|0.10<br>|0.00<br>|0.00<br>|
|3|0.05|0.22|0.00|0.00|
|4|006|024|000|000|
|5|.<br>0.15|.<br>0.36|.<br>0.12|.<br>0.32|
|6<br>|0.04<br>|0.19<br>|0.00<br>|0.00<br>|
|7|0.30|0.46|0.44|0.50|
|8|0.12|0.32|0.13|0.34|
|9|0.17|0.38|0.19|0.40|
|Type of school|||||
|Male|0.07|0.26|0.00|0.00|
|Female<br>|0.03<br>|0.16<br>|0.00<br>|0.00<br>|
|Coed|0.90|0.30|1.00|0.00|
|Type of secondary|||||
|<br>Academic|0.63|0.48|0.93|0.26|
|Technical|0.29|0.45|0.00|0.00|
|Both|0.07|0.26|0.07|0.26|
|Schedule|||||
|Complete|0.03|0.18|1.00|0.00|
|Morning<br>|0.40<br>|0.49<br>|0.00<br>|0.00<br>|
|Afternoon|0.14|0.35|0.00|0.00|
|Evening|0.43|0.49|0.00|0.00|
|Number of students|||||
|Total school|2954.60|1376.76|987.98|90.17|
|Taking exam|122.15|79.16|65.33|9.98|
|In overage<br>Repeating grade|47.28<br>103.30|45.15<br>73.72|12.11<br>47.56|7.03<br>35.93|
|Ratio teacher/stud.|28.44|6.20|27.20|3.48|
|Years of education,<br>|16.07|2.28|16.02|0.99|
|teachers|||||
|B. OUTCOMES|||||
|Dropout rates|||||
|Grade 1|0.040|0.05|0.020|0.02|
|Grade 2|0.031|0.04|0.023|0.02|
|Grade 3|0.026|0.04|0.019|0.02|
|<br>Grade 4<br>|0.026<br>|0.03<br>|0.015<br>|0.02<br>|
|Grade 5|0.020|0.33|0.018|0.02|
|Grade 6|0.071|0.09|0.021|0.02|
|Grade 7|0.040|0.04|0025|0.02|
|<br>Grade 8|0.038|0.04|,<br>0.032|0.03|
|Grade 9|0.039|0.05|0.036|0.03|
|Grade 10|0.033|0.04|0.038|0.04|
|Grade 11|0.012|0.02|0.021|0.05|
|Test scores|||||
|Mathematics|42.08|5.13|41.68|4.77|
|Reading|50.99|7.13|51.04|6.79|
|Number of observations|||||
|Students|||||
|Max|36244||1056||
|Min|34218||1013||
|Schools|2790||17||

16
Analogously to the HPA search for countries with good social indicators relative to their incomes, it would be interesting to also look for those with good social indicators relative to their levels of public expenditures on social services. There can be no presumption that simply throwing more money to the "social sectors" (health and education) will go far toward expanding the capabilities of the poor; indeed in many countries a disproportionate share seems to have gone to raising the capabilities of those with relatively ample capabilities already (Jimenez, 198?, Chapter 5; World Bank, 1990, Chapter 5). Nor has the evidence from micro-level anthropometric observations of participants in direct nutrition programs been anything but mixed; some assessments (such as Berg, 1987) have been more encouraging than others. (See the survey by Beaton and Ghassemi, 1982; also see World Bank 1990, Chapter 6). Opportunities for social sector policy reform, aiming to better reach those in greatest need, may be severely constrained by the limited set of redistributive policy instruments in many developing countries, particularly in rural sectors. The cost of an effective system of public support will depend crucially on those constraints. The detailed issues of policy design and implementation within actual administrative capabilities are of the utmost importance to many of the countries which could benefit from switching to a strategy of support-led security.

# _6 On the role of the international community_

A theme of HPA is that one should not underrate the scope for successful domestic public action in developing countries. Nor should one underrate the importance of the latter for effective external action. The moot well intentioned international efforts in famine relief can easily fail without 29
4

# (a) Growth and distribution in the long-run: tradeoffs between efficiency and equity'

As we argue in more detail below (in 3ect.Un 2b), the difficulty faced by the majority of developing countries during the 1980s was how to adjust to a particularly strong external shock that combined a deterioration in the terms of trade with an increase in interest rates on foreign debt and for many countries, the foreclosing of access to foreign funds. for economies on a normal growth path with resources at or close to full employment, adjustment required a shift in resources toward the tradables sector. For economies with idle capacity, adjustment required, in addition, structural reforms with supply-augmenting effects. An efficient resource transfer towards tradables would result in a net foreign exchange savings and would allow for interest payments on the foreign debt, which could no longer be rolled over because of insufficient foreign financing.

To induce a shift in resources toward the tradables sector, the relative price of tradables had to rise. Also, absorption had to be reduced relative to income. In the absence of access to foreign borrowing abroad, the easiest way to speed up adjustment is to increase the rate of investment by increasing the rate of domestic saving. But since the overal! ievel of expenditures also had to be reduced, such a strategy would have resulted in a drastic cut in consumption expenditures, which would already have fallen because of income loss resulting from the external shock. Poverty would certainly increase. These efforts to achieve efficient output levels are likely to conflict sharply with efforts to alleviate poverty during the adjustment period.<sup>5</sup> We now illustrate the dilemmas faced under those circumstances.

As the discussion of the country studies will show, the relative importance attached to equity and efficiency in the policymakers' intertemporal social objectives varied: concern for equity (increasing the consumption of the poorest) weighed more heavily in, say, Malaysia and Indonesia than in Cote d'Ivoire and Morocco which emphasized increasing efficiency (growth in per capita