rafmacalaba/datause-encoder-data huggingface dataset:
-9-

* Using the wage bill to regulate labot demand would only f-end to change the intra-firm ski.ll composition -- with a resulting bias toward unskilled, lower wage categot:ies -- and hence have an impact on replacement policy. Little efficiency gain might then be expected.

* Without basi" political acceptance of expanded wage differentials, policies aimed at using wage diffentials as a motivational device have tended to fail. Solidaristic wage outcomes likewise counter any presumed incentive outcome. If decentralization proceeds alongside greater tolerance of the private or parallel saczor, effo:t will be redirected to uncontrolled activities with adverse productivity implications for the socialist sector.

* Soft budget constraints for enterprise managers and short-run wage maximization objectives on the part of workers would tend to cluster wage demands at the upper limits of the permissible payment irrespective of performance.

* Any incentive effects intended to be arsociated with productivitv and skill related adjustments would tend to be diluted by a falling or low w of wages to total earnings t.

* The effecti-_vness of any tax-based incomes approach depends on the ability to enforce the penalties t8. To the extent that such 'control-byconsjnt' is absent. more complex bargaining will emerge. This appears to fit tba Polish RlE experience since the late 1970s. The outcome is accelerated wage drift and the inefficacy of wage controls as a tool for demand management.

* Ther:e is an inevitable tension batween using wage controls for macroeconomic objectives -- particularly excess demand in goods markets -- and for incentive purposes if ex ante excess demand is significant (and monetary overhang high) and supply elasticities low.

In summary, shifts to RIE regimes were attempts to address urtde '.ying incentive problems in the CPE and thereby raise productivity. The outcomes were inevitably ambiguous. Wage regulation could contain wage drift under certain conditions, including passive unions. The Hungarian system appears successful on this score over most of the 1980s. By contrast, where bargaining reflects a basic argument ovez the wage level and political power -- as in Poland -- incomes policies tend to be ineffectual in managing lemand as also on motivational grounds.

" It is instructive to note that for Hungary between 1984 and 1988 wages averaged 38% of total cash receipts; social benefits in cash, 22% and other receipts including Drivate economic activity, 24%. See; C.S.0 Monthly Bulletin of Statistics.

1' Particularly problematic in a RlE where bargaining over exemptions and special treatment remains endemic. See Gomulka and Rostowski (1984).
# <u>Table 5- Panel regressions using fiscal policy volatility calculated with a panel regression</u>

|<br>Dependent var<br>i<br>able: log of<br>volat<br>i<br>l<br>i<br>ty of consumpt<br>i<br>on|<br> <br>_FIXED_|<br> <br>_EFFECT_<br>O|<br> <br>_S REGRE_<br>LS|<br>_SSION_|<br>|<br>I|<br>_P_<br>V-1|_OOLING_||IV-2||
|---|---|---|---|---|---|---|---|---|---|---|---|
||(1)|(2)|(3)|(4)|(5)|(6)|(7)|(8)|(9)|(10)|(11)|
|Fiscal policy volatility<br>(calculated with a panel<br>regression)|**0.299**|**0.210**|**0.229**|**0.146**|**0.673**|**0.487**|**0.428**|**0.0478**|**0.444**|**0.480**|**0.209**|
||(0.000)|(0.001)|(0.023)|(0.107)|(0.000)|(0.000)|(0.001)|(0.810)|(0.000)|(0.000)|(0.046)|
|Government size||**0.254**|**0.304**|**0.263**||**0.266**|**0.289**|**0.208**|**0.167**|**0.543**|**0.329**|
|||(0.016)|(0.015)|(0.013)||(0.012)|(0.017)|(0.057)|(0.368)|(0.005)|(0.042)|
|Trade||**0.0183**|**0.215**|**0.242**||**0.00256**|**0.181**|**0.152**||||
|||(0.840)|(0.142)|(0.043)||(0.972)|(0.011)|(0.017)||||
|Volatility of income||**0.502**||**0.478**||**0.523**||**0.619**|**0.556**||**0.554**|
|||(0.000)||(0.000)||(0.000)||(0.000)|(0.000)||(0.000)|
|Persistence of income||||||**0.133**||**-0.0153**|**0.144**||**0.0147**|
|||||||(0.108)||(0.868)|(0.079)||(0.861)|
|Financial liabilities|||**-0.163**|**-0.154**|||**-0.187**|**-0.264**||**-0.166**|**-0.174**|
||||(0.074)|(0.071)|||(0.058)|(0.038)||(0.074)|(0.036)|
|Volatility of financial liabilities|||**0.00322**|**0.0397**|||**0.209**|**0.154**||**0.227**|**0.154**|
||||(0.958)|(0.426)|||(0.001)|(0.009)||(0.000)|(0.006)|
|Financial openness|||**-0.227**|**-0.174**|||**-0.107**|**-0.212**||**-0.0918**|**-0.149**|
||||(0.000)|(0.002)|||(0.150)|(0.009)||(0.180)|(0.009)|
|Dummy period 1|||||**0.0831**|**-0.0522**|**-0.00853**|**-0.149**|**-0.0610**|**-0.0348**|**-0.157**|
||||||(0.402)|(0.570)|(0.931)|(0.119)|(0.496)|(0.736)|(0.080)|
|Dummy period 2|||||**0.197**|**0.104**|**0.169**|**0.0349**|**0.109**|**0.131**|**0.0454**|
||||||(0.012)|(0.151)|(0.020)|(0.679)|(0.109)|(0.093)|(0.532)|
|Adjusted R-squared|0.14|0.43|0.23|0.46|0.47|0.66|0.63|0.70|0.66|0.61|0.71|
|Test of OID (p-value)|||||0.04|0.03|0.19|0.20|0.12|0.03|0.02|
|Number of observations|248|241|195|194|227|218|190|187|215|190|187|

NB: The p-values in the parentheses are based on heteroscedasticity-robust standard errors. In the IV regressions, the over-identifying test (OID) reports the p- value from the Sargan-Hansen J-test that the instruments are uncorrelated with the residuals. All regressions, except fixed-effects regressions, include an intercept.
The effects of corruption on productivity are modelled based on a firm level production function.<sup>2</sup> This paper offers a number of novelties with the respect to the existing literature on the consequences of corruption. First, the time spent dealing with bureaucracy, which is intimately linked to bribe payments, is directly examined. Second, the analysis makes use of cross-country firm level data in order to investigate the effects of country-level characteristics in mitigating the negative productivity impact of bribe payments. Third, we deal with the potential endogeneity of corruption at the firm level using an instrumental variables approach. To do so, we make use of the rich firm level data we have available in the BEEPS data to come up with reasonable instruments.

Results of econometric analysis highlight some differences between the effects of corruption _per se_ and those of the time tax. Across the entire sample, whereas the time devoted to complying with government regulations has no significant effect on firm level productivity, corruption has a statistically significant negative effect in instrumental variable specifications. Additionally, regression results show no evidence in favour of the “efficient grease” hypothesis, whereby bribing would be a second best option to achieve higher productivity levels by helping firms circumvent burdensome regulatory requirements. Namely, when bribing is made conditional on the time spent dealing with government regulations, the interaction term has no significant effect on productivity, implying that no trade-off emerges between the time and the bribe tax.

When controlling for the diversity of the sample distinguishing between recent EU members from Central and Eastern Europe and non-EU countries, the negative impact of the bribe tax on productivity is higher in non-EU countries. Observing that levels of institutional quality are generally higher in EU countries, this may suggest that the effects of corrupt behaviour on firm performance vary depending on broader country characteristics.

In order to test this environmental effect, bribery experienced by individual firms is made conditional on broader country characteristics that may play a role in influencing individual

> 2 Fisman and Svensson (2007) look at the relationship between corruption and firm growth using firm level data for Uganda.  Our paper is different in a number of aspects.  First, we use firm level data for a number of countries in Central and Eastern Europe and Central Asia, which allows us to explore cross country heterogeneity. This is important, as we show, since we find strong differences in the relationship between corruption and productivity in different countries.  Second, we look at productivity, not growth of sales as in Fisman and Svensson (2007).  .

5
each of the five levels of government (Table 1).

**Table 1.  Division of Budgetary Expenditures by Administrative Level**

|||**2005**||**2004**||**2003**|
|---|---|---|---|---|---|---|
||**Total**|**of which, for**<br>**Education**|**Total**|**of which, for**<br>**Education**|**Total**|**of which, for**<br>**Education**|
|Central|25.9%|6%|27.7%|7%|30.1%|8%|
|Provinces|18.9%|16%|18.7%|15%|18.7%|15%|
|Pref. / Cities|22.7%|18%|22.2%|18%|21.5%|18%|
|Counties|26.7%|48%|25.2%|46%|23.3%|42%|
|Townships|5.9%|12%|6.1%|14%|6.3%|17%|

Source: Calculated from Compendium of Local Fiscal Statistics, 2003, 2004, 2005; and Finance Yearbook of China, 2004, 2005, 2006.

Sitting at the bottom of this structure, rural local governments at the county and township levels in China jointly account for nearly one-third of national budgetary expenditures. They have almost sole responsibility for the provision of vital public services to the rural populace. For example, as shown in Table 1, the high costs of providing basic education explain why the county and township levels account for 60 percent of total budgetary outlays for education. Below the township is still another layer of administration, albeit not a formal level of government. These are administrative villages, which are the basic level of governance for public affairs for most rural citizens; they have taken over many of the functions formerly performed by the people’s communes.

The administrative village has important functions in implementing government policies and in the provision of public goods and service. These include the enforcement of government policies in such important areas as land administration and family planning, and, in the area of public finance, the collection of fees and other revenues and the financing and provision of public goods and services. In particular, villages play an important role in the provision of rural infrastructural services and are involved in poverty reduction activities, social welfare, basic education, and public health. Even though most of the public investments and services in which villages are involved are largely financed from above, some crucial resources are still provided by the village level and their provision is supported by the villages. With the call to extend public finance and service delivery into the rural areas, the importance of the village level as a (quasi) government for rural citizens is likely to 7
little support for it. Alternatively, heat may have negative impacts on legal sources of income (for instance, by reducing crop yields) and so increase the benefits of committing crime.

The hypothesis that heat increases criminal activity by reducing psychological control also has a long history. Work in psychology has documented the role of heat in increasing aggression for decades (Baron and Bell, 1976), succinctly summarized by Boyanowsky (1999): “aggression in heat is mediated by emotions, cognitions, and stress from affectivethermoregulatory conflict that produces violently aggressive behavior.” These results have been supplemented by more recent work in experimental economics showing the same (Alm ̊as et al., 2019). Observational work using billions of data points from Twitter has shown that heat increases negative sentiment (Baylis, 2020) in countries around the world. Arguments for a psychological mechanism linking heat and crime combine the observation that heat can increase irritability, anger, and hostility (Anderson, 1989; Anderson et al., 2000; Denissen et al., 2008; Larrick et al., 2011) with the evidence that a large share of crime, especially violent crime, is due to a non-rational response to stimuli (Heller et al., 2017).

Heat, thus, makes individuals more likely to respond to a given stimulus with violence.<sup>6</sup> This is particularly consistent with the evidence that heat has much larger impacts on violent crimes, or crimes of passion, than property crimes (Ranson, 2014; Heilmann and Kahn, 2019; Blakeslee et al., 2018; Mukherjee and Sanders, 2021). Heilmann and Kahn (2019) suggests that the psychological mechanism can also explain observed poverty and income gradients in the impact of heat on crime due to lower levels of investment in the development of noncognitive skills in childhood in higher poverty neighborhoods (Fletcher and Wolfe, 2016).

> 6Cohen et al. (2018) suggests that increased consumption of alcohol on hot days drives some of the observed increases in crime. To the extent that alcohol and heat both reduce psychological control, this explanation is not mutually exclusive with the psychological explanation.

9
Education is an important predictor of extremism. Respondents with completed secondary and tertiary education levels are less likely to be radicalized than the reference category of respondents who have “completed elementary education or less”. The coefficient on the dummy for “4 years of tertiary and beyond” (0.306, s.e.=0.055) is more than two times higher than that on the dummy for “Secondary to 3 year of tertiary” (0.126, s.e.=0.037), suggesting a strong negative association between extremism and educational attainment. The role of education in lowering the incidence of individuals with extreme attitudes has been pointed out in numerous country-case studies and is consistent with the view that education tends to make people more willing to accept different opinions or cultures and to live in harmony with those who do not share their opinions or those from a different culture. At the same time, the results from the SAW equation indicate that educated people also tend to be happier than the less educated ones.

The radicalization-related factors, included only in the SAR equation, are dummies for the importance of religion and for the willingness to sacrifice one’s life for own beliefs. Consistent with the religion-radicalization correlation depicted in Figure 7, we find that respondents who find religion to be an important part of their daily life are less likely to justify attacks in which civilians are targeted than others. This result seems surprising since people who support or operate violent extremism usually claim that terrorist attacks are in the name of religion.<sup>20</sup> Yet, others insist that the motivation behind terrorist attacks are all but religious and these results are consistent with this view. Finally, the results suggest that people committed to sacrificing their lives for their beliefs tend to be more likely to justify attacks in which civilians are targeted. This result suggests that extremists may sympathize with terrorists who often operate through suicide-style attacks. The

> 20 For instance, in the case of the terrorist acts perpetrated by various Islamist groups, the usual claim is that these attacks are in line with “Jihadism”, which is directly connected to Islam.

25
conglomerates. The New York City Housing and Vacancy Survey, for example, can be used to examine patterns and predictors of housing turnovers of different ethnic groups (Rosenbaum 1992). Data collected can then lend itself also to study social behaviors. Borrell et al (2000) use the Barcelona Health Interview Survey to examine social class inequalities in health related behaviors like tobacco and alcohol consumption Second, city surveys are also key instruments to learn about priorities and perceptions of the population. Jacobi (1994) employs a survey to understand environmental problems at the household and neighborhood level and the respondents’ perceptions with regard to the nature and cause of these problems and best means for their resolution in Sao Paulo. Similarly, Mensah and Whitney (1991) capture perceptions associated with public and domestic refuse and its disposal and their relationships with gender, educational level, and ethnicity in a West African city. They are also used to examine transport priorities in Bejing (Wei 1998) and to record satisfaction levels with the whole array of public services provision in Bangalore (Paul 1998).

Lastly, several city surveys are designed to measure (and monitor) welfare levels of the population while combining such assessment with the subjective evaluation of the population about changing living standards. Such city surveys have been applied repeatedly in St. Petersburg (Protassenko 1997) and in Bloemfontein, South Africa (Beukes and van der Colff 1997).

# _3.2. The Cali Survey_

Given the information requirements for the development of the city strategy, we decided to field a specialized city survey in Cali. The alternative to fielding a specialized survey would have been to rely on information available from the national household survey ( _Encuesta National de Hogares,_ EHO) conducted periodically by the statistical institute DANE. As for four other cities in Colombia, the EHO was representative at the city level with a sample of roughly 500 households interviewed per survey round. However, the _Encuesta National_ was quite limited in scope and concentrated on measuring income, employment and housing conditions with some, but limited, education information captured as well. Since not specifically focused on Cali, it did not examine access to specific city programs nor population perceptions and priorities for future city policies. Further, it was only representative at the city 7
Figure 4. Sukuk Issuance by Issuer Type <!-- Start of picture text --> Short-term issuance Long-term issuance<br> 70<br> 40<br> 60<br> 35<br> 50<br> 30<br> 40 25<br> 20<br> 30<br> 15<br> 20<br> 10<br> 10 5<br> - -<br>2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013<br>Corporate Quasi-Sovereign Corporate Quasi-Sovereign<br>Sovereign Sovereign Supranational<br>Source: Islamic Finance Information Service (http://www.islamicfinanceservice.com) as of April 15,<br>2014.<br>$ Billion $ Billion<br><!-- End of picture text --> _Note:_ GCC = Gulf Cooperation Council.

# **IV. KEY IMPEDIMENTS IN THE DEVELOPMENT OF SUKUK**

Despite the growth, the development of sukuk markets has been impeded by several factors. The lack of standardization of sukuk structures and practices, issues surrounding insolvency and investor protection, and lack of liquidity are key issues impeding the growth of sukuk markets and are sources of major debates among stakeholders, policy makers, and market players alike.

# **_Standardization_**

As an instrument arising from a religious background, sukuk face a challenge coming from different interpretations of Sharia principles. In one market, Sharia compliance may be based on the forms of the transactions (i.e., whether the sukuk are based on identifiable assets or transactions), whereas in others compliance is mainly determined by the intent (i.e., whether the structure adheres to the spirit of risk sharing). In the latter, structures that attempt to achieve the same economic outcome as conventional bonds are therefore considered to distort the principles.

Justice Usmani’s 2007 statement drew attention to the different approaches existing in the market relating to the interpretation of Sharia principles.<sup>14</sup> Until 2007, many sukuk had been issued with relatively loose interpretation of Sharia principles, in an attempt to resemble conventional bonds. A main criticism by Justice Usmani is that many sukuk structures imply a return guaranteed by an obligor (e.g., future purchase of investment at a predetermined price linked to its par value), which defeats the purpose of the profit- or risk-sharing spirit of Islamic finance. In reaction to this statement, the volume of sukuk issuances based on _mudharaba_ or _musyaraka_ structures dropped significantly in the GCC region. A similar criticism extends to a structure based on sale and

> 14Justice Usmani’s statement was followed by AAOIFI’s statement on what constitute Sharia-compliant sukuk.

6
**instance, lending/grant-making, risk management, and advisory and intermediation services.** In volume terms, IFC and MIGA each supported more than a third each of innovative finance solutions on the ground by the World Bank Group, followed by IBRD (17 percent), trust funds (8 percent), and finally IDA (7 percent) over the 2001–8 period. IBRD and IFC drove much of the growth in the Bank’s innovative finance efforts with average annual growth rates of 187 percent and 66 percent, respectively, over the same period.

2.19 **As far as concessional and grant resources were concerned, trust funds— particularly those relating to** **_global programs and partnerships_ (GPPs)—were a rapidly growing component of the Bank’s business.** As Figure 2.3a illustrates, 82 percent of the US$1.86 billion in innovative finance-related TF grant disbursements between 2002 and 2008 were channeled through 28 (out of a total of 193) global programs. Eighty-one percent of disbursements for innovative schemes under GPPs were focused on health and the environment, and were concentrated in the Concessional Finance and Global Partnerships, Sustainable Development, and Human Development Vice Presidencies.<sup>16</sup>

**<u>Figure 2.3a-b: Disbursements from World Bank-Administered Trust Funds</u> Supporting Innovative Finance Applications, 2002-8**

<!-- Start of picture text --> 2.3a: Volume of TF Disbursements 2.3b: Composition of TF Disbursements<br>to Global Versus Country Programs by Expenditure Categories<br>1000 100%<br>800 80%<br>600 60%<br>400 40%<br>200 20%<br>0 0%<br>2002 2003 2004 2005 2006 2007 2008 2002 2003 2004 2005 2006 2007 2008<br>Country Global Other Investment TA Admin Costs Other<br><!-- End of picture text --> 2.20 **Trust-funded innovative finance schemes also demand more intensive inputs in terms of specialized sectoral or financial expertise.** While the costs of managing complexity and risk are hard to quantify, a review of the components of _trust-funded_ innovative finance schemes highlights the cost and knowledge dimensions of innovative finance applications or uses (Figure 2.3b). Over the 2002–8 period, on average, investment flows accounted for 84 percent of grant disbursements, technical assistance (for example, supporting design and supervision) accounted for 11 percent, and administration costs accounted for 5 percent.<sup>17</sup> 2.21 **Trust-funded innovative finance schemes, in particular those supported by Financial Intermediary Trust Funds (FIFs), carry both generic as well as specialized risks.** Standard risks relate to weaknesses in financial management and accounting, upstream

> 16 Data reflect disbursements at the fund level. At the grant level, Africa accounts for the third-largest volume of disbursements under GPPs supported by innovative finance schemes.

> 17These costs are likely to be underestimated. There are difficulties in estimating the average administrative cost of innovative initiatives because the full administrative costs of implementing agencies are not available.

11