rafmacalaba/datause-encoder-data huggingface dataset:
Sustaining urban growth through
            innovative capacity : Beijing and Shanghai in comparison
The authors examine the diverse
            prospects of innovative sectors in Beijing and Shanghai
            using available indicators and data collected for this study
            through surveys. Beijing is the first choice for companies
            locating in China, but foreign employees prefer Shanghai for
            living convenience and cultural amenities. While Shanghai
            lags behind Beijing in knowledge creation and the generation
            of startup companies in the innovative sectors, it takes the
            lead in the commercialization of technological innovations
            and the development of creative cultural industries. The
            municipal authorities of Beijing and Shanghai have improved
            the innovation environment of the cities, but certain
            elements still stunt the growth of innovative industries,
            which cannot be removed easily. Three kinds of
            knowledge-intensive enterprises included in innovative
            sectors in the survey are high-tech manufacturers,
            knowledge-intensive business services, and creative content
            providers. The survey found that the clustering of the firms
            arose from the attraction of preferential policies and the
            purchase by governments or state-owned enterprises of
            information technology products. The survey shows that
            interaction among firms is inadequate in the knowledge-based
            industrial clusters in both Beijing and Shanghai. Hence, it
            may be some time before clustering leads to substantial
            gains in collective efficiency for innovative industry in
            Beijing and Shanghai.
What does regional trade in South
            Asia reveal about future trade integration Some empirical evidence
In 1995 the seven South Asian
            countries-Bangladesh, Bhutan, India, the Maldives, Nepal,
            Pakistan, and Sri Lanka-initiated a multilateral framework
            for regionwide integration under the South Asian
            Preferential Trade Agreement (SAPTA). In a recent
            initiative, members agreed that SAPTA would begin the
            transformation into a South Asian Free Trade Area (SAFTA) by
            the beginning of 2006, with full implementation completed
            between 2009 and 2013. The impetus toward regional
            preferential trading arrangements and greater regional
            economic integration raises many important issues, both for
            the South Asian region as a whole and for the individual
            countries. The author uses the natural trading partners
            hypothesis as the empirical criterion to assess the
            potential success of a South Asian trading bloc. Using
            various definitions of the natural trading partner
            hypothesis-based on trade volume, geographic proximity, and
            the complementarity approaches-the author demonstrates that
            the South Asian countries can be characterized only
            moderately as natural trading partners. This
            characterization is, however, largely a consequence of
            previous impediments to trade among regional members. The
            author further demonstrates through additional statistical
            measures-including revealed comparative advantage indices,
            trade concentration, and trade competition profiles-that the
            trade structures that have evolved among the South Asian
            Countries may not facilitate a rapid increase in
            intra-regional trade. But there is evidence that previous
            unilateral trade liberalization efforts in the South Asian
            countries have already had a positive impact in boosting
            both intra- and extra-regional trade. Continuing the process
            of unilateral liberalization, in parallel with regional
            integration, would aid the South Asian countries to continue
            to diversify their still narrow export bases and potentially
            evolve new comparative advantages and complementarities that
            could facilitate the successful implementation of SAFTA.
Promoting innovation in developing
            countries: a conceptual framework
The author provides a conceptual
            framework for approaching the promotion of technological
            innovation and its diffusion in developing countries.
            Innovation climates in developing countries are, by nature,
            problematic, characterized by poor business and governance
            conditions, low educational levels, and mediocre
            infrastructure. This raises particular challenges for the
            promotion of innovation. The latter should be understood as
            the diffusion of technologies-and related practices-which
            are new to a given context (not in absolute terms). What
            matters first is to provide the necessary package of
            support-technical, financial, commercial, legal, and so
            on-with flexible, autonomous agencies adapting their support
            and operations to the different types of concerned
            enterprises. Facilitating and responding to the emergence of
            grass-root needs at the local level is also essential.
            Support to entrepreneurs and local communities should be
            primarily provided in matching grant forms to facilitate the
            mobilization of local resources and ownership. It is of
            primary importance to pay the greatest attention to country
            specificities, not only in terms of development level, size,
            and specialization, but also in terms of administrative and
            cultural traditions. At the global level, major issues need
            also to be considered and dealt with by appropriate
            incentives and regulations: the role of foreign direct
            investment in developing countries' technological
            development, conditions of technologies' patenting and
            licensing, the North-South research asymmetry, and brain
            drain trends.
Decomposing changes in income
            inequality into vertical and horizontal redistribution and
            reranking, with applications to China and Vietnam
It is acknowledged that the lack of any
            systematic link between growth and income inequality does
            not necessarily mean that economic growth is not accompanied
            by major changes in the underlying income distribution. The
            author uses a method devised to decompose the redistributive
            effect of a tax to analyze the extent to which vertical
            redistribution associated with changing incomes over time is
            offset or reinforced by horizontal redistribution and
            re-ranking. He uses panel data from China and Vietnam over a
            period when both countries grew spectacularly as they
            transitioned from planned to market economies, and yet
            experienced smaller annual percentage increases in income
            inequality. The results suggest that substantial amounts of
            horizontal redistribution and re-ranking in both China-and
            to a lesser extent Vietnam-more than offset pro-poor
            vertical redistribution. Without the horizontal
            redistribution and re-ranking, the Gini coefficient for
            China might have fallen between 1989 and 1997-substantially so.
Activities, employment, and wages in
            rural and semi-urban Mexico
The author addresses the labor markets
            in rural and semi-urban Mexico. The empirical analyses show
            that non-farm income shares increase with overall
            consumption levels and, also, with time. Rural-dwellers in
            lower quintiles of the consumption distribution tend to earn
            a larger share of their nonagricultural incomes from wage
            labor activities. For the poorest, low-productivity wage
            labor activities are important. The quantile wage regression
            analysis for rural Mexico shows a rather heterogeneous
            impact pattern of individual characteristics across the wage
            distribution on monthly wages.  The author's findings
            reveal that education is key to earning higher wages, and
            that workers in more dispersed rural areas earn less than
            their peers in semi-urban rural areas (localities with less
            than 15,000 inhabitants). The rural non-farm sector is
            heterogeneous and includes a great variety of activities and
            productivity levels across non-farm jobs. Moreover it can
            reduce poverty in a couple of distinct but qualitatively
            important ways in rural Mexico. The analysis of non-farm
            employment in rural Mexico suggests that the two key
            determinants of access to employment and productivity in
            non-farm activities are education and location.
Health insurance impacts on health
            and nonmedical consumption in a developing country : Health
            insurance impacts on health and non-medical consumption in a
            developing country
The authors examine the effects of the
            introduction of Vietnam's health insurance (VHI)
            program on health outcomes, health care utilization, and
            non-medical household consumption. The use of panel data
            collected before and after the insurance program's
            introduction allows them to eliminate any confounding
            effects due to selection on time-invariant un-observables,
            and their coupling of propensity score matching with a
            double-difference estimator allows them to reduce the risk
            of biases due to inappropriate specification of the outcome
            regression model. The authors' results suggest that
            Vietnam's health insurance program impacted favorably
            on height-for-age and weight-for-age of young school
            children, and on body mass index among adults. Their results
            suggest that among young children, VHI increases use of
            primary care facilities and leads to a substitution away
            from the use of pharmacists as a source of advice and
            non-prescribed medicines toward the use of them as a
            supplier of medicines prescribed by a health professional.
            Among older children and adults, VHI results in a marked
            increase in the use of hospital inpatient and outpatient
            departments. The results also suggest that VHI causes a
            reduction in annual out-of-pocket expenditures on health and
            an increase in non-medical household consumption, including
            food consumption, but mostly nonfood consumption. The
            authors' estimate of the VHI-induced reduction in
            out-of-pocket health spending is considerably smaller than
            their estimate of the VHI-induced increase in non-medical
            consumption, which is consistent with the idea that
            households hold back their consumption considerably if,
            through lack of health insurance, they are exposed to the
            risk of large out-of-pocket expenditures. This is especially
            plausible in a country where at the time (1993), a single
            visit to a public hospital cost on average the equivalent of
            20 percent of a person's annual nonfood consumption.
Trade costs and location of foreign
            firms in China
The authors examine the determinants of
            entry by foreign firms using information on 515 Chinese
            industries at the provincial level during 1998-2001. The
            analysis, rooted in the new economic geography, focuses on
            market and supplier access within and outside the province
            of entry, as well as production and trade costs. The results
            indicate that market and supplier access are the most
            important factors affecting foreign entry. Access to markets
            and suppliers in the province of entry matters more than
            access to the rest of China, which is consistent with market
            fragmentation due to underdeveloped transport infrastructure
            and informal trade barriers.
Trade preferences to small
            developing countries and the welfare costs of lost
            multilateral liberalization
The proliferation of preferential trade
            liberalization over the past 20 years has raised the
            question of whether it slows down multilateral trade
            liberalization. Recent theoretical and empirical evidence
            indicates this is the case even for unilateral preferences
            that industrial countries provide to small and poor
            countries but there is no estimate of the resulting welfare
            costs. To avoid this stumbling block effect the authors
            suggest replacing unilateral preferences by a fixed import
            subsidy. They argue that this scheme would reduce the drag
            of preferences on multilateral liberalization and generate a
            Pareto improvement. More important, the authors provide the
            first estimates of the welfare cost of preferential
            liberalization as a stumbling block to multilateral
            liberalization. By combining recent estimates of the
            stumbling block effect of preferences with data for 170
            countries and over 5,000 products they calculate the welfare
            effects of the United States, European Union, and Japan
            switching from unilateral preferences to the developing
            countries to the import subsidy scheme. Even in a model with
            no dynamic gains to trade the authors find that the switch
            produces an annual net welfare gain for the 170 countries
            ($4,354 million) and for each group: the United States,
            European Union, and Japan ($2,934 million), the developing
            countries ($520 million), and the rest of the world ($900 million).
Trade preferences and differential
            treatment of developing countries : a selective survey
Nonreciprocal trade preferences and
            provisions in the GATT/WTO that allow developing countries
            greater leeway to retain or use protectionist policies are
            two of the central planks of so-called special and
            differential treatment (SDT) for developing countries in the
            multilateral trading system. The authors survey the
            literature on the rationales, institutional features, and
            economic effectiveness of SDT. A large literature has
            emerged on SDT in the past 50 years, by both proponents and
            opponents. They summarize a number of key contributions on
            the subject, with a special emphasis on the evaluation of
            the impact of SDT, especially preferential market access.
            The issue of SDT has become very topical again, following a
            period during which it was viewed as an outdated concept for
            the multilateral trading system. The authors therefore
            devote attention as well to a number of recent contributions
            that discuss (1) whether there is a continued need for SDT,
            and (2) how this might be designed from both a development
            (recipient) objective and from the perspective of the
            trading system more generally. A major theme of the survey
            is that most of the issues that are debated today were
            already being discussed in the 1960s. The authors conclude
            that those who questioned the value of unilateral
            preferences have proven to be prescient.
Singapore as an innovative city in
            East Asia : an explorative study of the perspectives of
            innovative industries
The city-state of Singapore has achieved
            rapid economic development in the past by its positioning as
            an efficient business hub in Asia. To remain competitive in
            the global knowledge economy, however, Singapore needs to
            move beyond efficiency by developing a strong
            "innovative" edge as well. This paper examines the
            challenges that Singapore faces in seeking to do so through
            an explorative survey of 40 firms from three innovative
            sectors: high-tech manufacturing industries,
            knowledge-intensive business services (KIBS), and creative
            content industries. Overall, while the survey confirms
            Singapore's continuing competitive strength in
            efficiency infrastructure, it also finds a favorable
            perception of Singapore as an innovative city. Indeed, many
            of the industry actors indicated that an efficient business
            infrastructure is a prerequisite for locating their
            innovative activities in Singapore, suggesting that the
            relationship between innovation and efficiency is
            complementary, rather than substitutional. While the study
            found that intellectual property and its protection are
            widely recognized by actors in all three sectors,
            interesting differences exist. In particular, intellectual
            property protection appears to be of greater concern to the
            high-tech research and development-intensive manufacturing
            sector and the creative contents sector than to the KIBS
            sector. Another interesting difference is that while
            competition in high-tech innovation tends to be global,
            competition in creative content tends to have a stronger
            local or regional dimension. Public policy in East Asia has
            traditionally emphasized the development of technological
            innovation capabilities in the manufacturing sector. In
            light of the findings, public policymakers may need to be
            more sensitive to the nuanced differences in policies needed
            to promote the new creative content industries and the
            associated supporting KIBS.
From efficiency-driven to
            innovation-driven economic growth : perspectives from Singapore
This paper looks at Singapore's
            efforts to transform the economic growth base from one that
            is predominantly efficiency-driven to one that is more
            innovation-driven. To accelerate the transition process, the
            government is aggressively investing in "innovation
            infrastructure"-systems and institutions that make the
            city a more conducive environment for innovations. The modus
            operandi, with a distinctive "winner-picking"
            flavor, mirrors that of its earlier strategic industrial
            policy in building up the manufacturing sector. It is also
            in sync with the new urban growth literature which argues
            that the success of any innovation-driven growth strategy
            depends on a city's ability to attract a large
            community of creative individuals in different fields.
            Innovation infrastructure building requires more than
            putting in the right systems. It also requires a mindset
            change at various levels of society. This paper looks at how
            the government's policy philosophy and practices have
            evolved over time, and discusses the effectiveness of the
            government-led, strategic supply-push approach in propelling
            Singapore onto an innovation-driven growth path. It takes
            into consideration the city-state's underlying
            comparative advantages (or disadvantages) and asks how
            Singapore's existing strength in efficiency
            infrastructure may give it a first mover advantage in
            attracting creative talent, how its success may be affected
            by the small size of the economy, and the various political
            and social constraints that a small sovereign city-state
            faces. These issues are explored against the backdrop of the
            keen competition among the major cities in the region to
            become an innovation hub.
From efficiency-driven to
            innovation-driven economic growth : perspectives from Singapore
# WPS3569

## **From Efficiency-Driven to Innovation-Driven Economic Growth: Perspectives from Singapore**<sup>*****</sup>

Kim-Song Tan (kstan@smu.edu.sg) and Sock-Yong Phang (syphang@smu.edu.sg)<sup>1</sup>

## Singapore Management University

### World Bank Policy Research Working Paper 3569, April 2005

_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._

* This paper was prepared for the East Asia Prospect Study being conducted in DECRG at the World Bank.  The authors thank Shahid Yusuf, Anjum Altaf, and Kaoru Nabeshima for their suggestions and guidance.  The authors also are grateful for the helpful comments provided by the participants of the workshop organized for this study held in Bangkok, February 22-23, 2004.

1 We would like to thank Lee Lay Pheng for her very able and patient research assistance.
Taking stock of risk management
            techniques for sovereigns
The author reviews the current state of
            affairs and thinking on external risk management for
            developing countries. He tries to identify the reasons
            behind the limited risk management by sovereigns. Perverse
            incentives arising from a too generous international safety
            net, limited access to international financial markets by
            developing countries arising from low creditworthiness, a
            limited supply of financial risk management tools suited to
            developing countries, and a poor supply of skills have
            inhibited risk management. Another constraint has been the
            limited attention given to the strategic objectives for risk
            management. Going forward, the author identifies actions by
            international financial markets, countries, and
            international financial institutions that can help improve
            risk management. These actions include GDP-indexed loans and
            efforts to develop price and weather indexes.