rafmacalaba/datause-encoder-data huggingface dataset:
likelihood of unemployment reduction events commencing. These findings are consistent with the results we obtained when we used the subcomponents of the Economic Freedom Index, which also pointed towards the importance of an efficacious legal system and secure property rights as important enabler of employment growth. They also resonate with the descriptive statistics recorded in Table 4, which demonstrated that countries that embark on episodes are characterized by both higher initial unemployment and expedited contract enforcement relative to countries that do not. Interestingly, the stringency of labor regulations and the generosity of unemployment benefits do not appear to help predict the onset of unemployment reduction episodes. Financial openness does not appear an important determinant of drastic unemployment reductions either.

# **6 Conclusions**

We examine how countries across the world have generated sustained reductions in unemployment by using an event study analysis. The frequency with which such unemployment reduction episodes occur is encouraging. Each year approximately 1 in every 20 countries not already in an episode embarks on such an unemployment reduction episode. Moreover, the associated decline in unemployment is typically large, since, average unemployment seven years after onset stood at less than half its initial level.

In spite of their prevalence, unemployment reduction episodes are difficult to predict ex ante, reflected in the low predictive power of models of their onset and the fact that countries embarking on episodes are characterized by initial conditions very similar to those which do not in terms of growth, GDP, FDI inflows, exports, imports, investment, government spending, inflation, democracy, and various proxies for regulatory quality. Nonetheless, countries that embark on episodes tend to suffer higher unemployment and have _de jure_ policies dictating more prompt enforcement of contracts.

Episodes tend to coincide with an acceleration of growth, an overall improvement in macroeconomic conditions manifested, inter alia, in higher trade flows, high investment and lower government spending, as well as improvements in the regulatory framework. In addition, the incidence of crises reduces significantly, suggesting that episodes sometimes concur with recovery. Although we are not able to attribute causation, these findings point towards the importance of prudent macroeconomic management in fostering sustainable employment growth.

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to the dibao recipients observed in the 2009 data would yield minimal improvement in poverty by any measure.

The simulations yield several broad lessons for cash transfer programs. First, they highlight potential tradeoffs between program coverage and the generosity of transfers per recipient. Program coverage and generosity can have different impacts on poverty, and those impacts depend on targeting performance. Our simulations illustrate how the impacts of coverage versus generosity change under alternative targeting scenarios. We treat targeting as exogenous, but we acknowledge that targeting could be influenced by the parameters of the program and thus be endogenous. For example, small transfers may promote self‐selection by poorer households into the program, thus improving targeting as evidenced by the Brazilian Bolsa Familia program (Bastagli, 2008). This sort of interaction between program parameters and targeting performance strengthens the case for expanding coverage versus increasing transfer amounts.

Second, the simulations shed some insights about local variation versus uniformity of cash transfer programs. The argument for standardization in China is that under the decentralized fiscal system, local budgets for transfer programs are positively correlated with local income. Our simulations suggest that in the presence of weak targeting, the gains from standardization may in practice be limited. Moreover, we speculate that under these conditions adopting a uniform eligibility criterion may be more effective in reducing poverty than adopting a uniform transfer, because a uniform threshold would tend to increase the proportion of recipients located in poorer locations. Standardization of thresholds (or, for that matter, transfers) would, however, probably require fiscal subsidies to poorer locations in order to support their increased program costs.

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investments in competitive sectors vis-à-vis others. Policy tools such as the principles of subsidiarity can serve for this purpose.<sup>30</sup> Third, this study highlights that a higher degree of separation from the government can serve to mitigate principal-agent issues and improve operational and financial performance. Even though we do not measure corporate governance arrangements such as appointment of board members, independence, and other key aspects, our proxy of autonomy based on the distance from the government (i.e., layers of ownership) serves as an entry point and offers some indicative evidence. Compared to other BOSs, indirectly owned BOSs are more productive and profitable, and achieve better returns for each dollar invested in assets or equity. Moreover, as the distance from the public authority (i.e., layers of ownership) increases, BOSs seem to narrow the gap vis-à-vis private peers. This could be interpreted to mean that higher autonomy and separation of functions of the government from the day-to-day operations can lead to performance and operational gains. In that sense, policy measures that foster BOSs’ autonomy and a higher degree of separation of the state as owner such as corporate governance and ownership reforms could potentially improve accountability and transparency and translate into significant performance gains.

Finally, we find that BOSs can play a counter-cyclical role in periods of crisis by protecting employment and job creation in the short term. However, we do not find significant evidence that BOSs maintain relatively higher levels of investment compared to private counterparts in response to economic shocks. Further analysis is required to explore the medium- and long-term adjustments and potential trade-offs in such counter-cyclical effects and long-term reallocation of resources and efficiency gains. Further studies are also needed to understand other policy implications of state ownership in terms of firm dynamism, misallocation, innovation, and productivity to understand the full extent of the implications of the role of the state in the economy.

> 30 Under the subsidiarity principle, the state has a subsidiarity duty to perform only in sectors that cannot be provided by the private sector. For more details on how to implement it, please refer to Alfalter & Sanchez-Navarro (2023) and the World Bank Markets and Competition policy Assessment Toolkit (World Bank Group, Forthcoming).

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1, episodes of USD appreciation vis-à-vis the Euro and other currencies seem to have negatively affected garment exports and have made trips to Cambodia more expensive for non-American tourists. The seeming decline in the competitiveness of the tradable sector may also partly explain the increasing share of credit flowing into construction and real estate that recent studies associate with higher financial risks (Ahmed et al., 2014; IMF, 2017).

**Figure 1** : US dollar appreciation correlates with a decline in Cambodian garment exports to the EU

<!-- Start of picture text --> 120% 10%<br>100%<br>5%<br>80%<br>60%<br>0%<br>40%<br>-5%<br>20%<br>0%<br>-10%<br>-20%<br>-40% -15%<br>Exports to EU, yoy EU/USD, quarterly change<br>Poly. (Exports to EU, yoy) Poly. (EU/USD, quarterly change)<br>Change in exports<br>Change in the exchange rate<br>1999-Q2 2000-Q2 2001-Q2 2002-Q2 2003-Q2 2004-Q2 2005-Q2 2006-Q2 2007-Q2 2008-Q2 2009-Q2 2010-Q2 2011-Q2 2012-Q2 2013-Q2 2014-Q2 2015-Q2 2016-Q2 2017-Q2<br><!-- End of picture text --> Source: European Central Bank, IMF Directions of Trade Database. Note: “Poly.” refers to a polynomial fit line to existing data points.

In order to gain a more complete understanding of the limitations posed by the lack of independent monetary and exchange rate policy under dollarization, this paper assesses the hypothesis that US interest rate increases, resulting in USD appreciation, negatively affect Cambodian exports to the EU. The remainder of this paper is organized as follows. Section 2 presents a brief literature review. Section 3 discusses the theoretical framework and estimation methodology. Section 4 describes the data and presents estimation results. Section 5 discusses policy options, and Section 6 concludes.

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reform evolved once the reform was implemented. The policy experiment that is the focus of this study is the reform of the gas subsidy implemented in El Salvador in April 2011. In order to do so we rely on six consecutive surveys, one conducted before the implementation of the reform and the remaining five afterwards. The reform implied the removal of the price subsidy for liquefied petroleum gas (LPG) resulting in a price increase for consumers from $5.10 to $13.60 per 25-lbs bottle of LPG, the most common fuel used for cooking by Salvadorans at home. In place of the price subsidy the authorities introduced a monthly income transfer of $8.50 to households with an electricity consumption of less than 200 Kwh per month. This was a relatively high cut-off as around 94 percent of households with access to electricity consumed less than the eligibility threshold. For these households the monthly subsidy of $8.50 (equivalent to a bottle of LPG) was provided through the electricity bill. Households without access to electricity were entitled to a government-issued card that would allow them to collect the monthly $8.50.

Overall, an incidence analysis of the reform suggests that around two-thirds of households benefited from the reform (Tornarolli and Vazquez [13]). Ex-ante the winners from the reform included two groups. First, households that did not use LPG as cooking fuel and would now benefit from the $8.50 per month. Since LPG use was not as common among the lowest income groups as among the richest this facet of the reform was particularly pro-poor. Second, households who consumed less than one bottle of LPG per month would also benefit from the reform. On the losing side, some of the richest households in El Salvador would become ineligible for the LPG subsidy on account of their high electricity consumption or because they could collect the subsidy for only one of their properties. Households that consumed more than one bottle of LPG per month would also lose out. Nevertheless, the reform proved to be – at least initially - highly unpopular. In January 2011 just one-third of the electorate favored the upcoming reform and in August of the same year less than 45 percent of people declared to be either ‘satisfied’ or ‘very satisfied’ about it. The satisfaction rate continued to increase during the following year and a half before stabilizing at around 65 percent, the level observed in our last survey in September 2013.

In our empirical investigation we answer two research questions. First, what are the factors driving the unpopularity of the reform before and in the aftermath of its implementation? Second, what variables account for the relatively high popularity of the reform two years after it was implemented? In selecting potential explanatory variables to include in our analysis we draw from the recent literature on energy subsidies which 3
# _3.2 The Farm-household Data_

We draw on three longitudinal survey rounds of a nation-wide sample of Bangladeshi rural households spanning 2000–2008. These surveys followed an earlier survey in 1988 undertaken by the Bangladesh Institute of Development Studies (BIDS) to study changes in rural poverty and livelihoods in response to technological progress, food-price hikes, and other factors. The baseline survey covered 1,240 rural households from 62 villages in 57 of the country’s 64 districts (Hossain et al., 1994). The households were revisited in 2000, 2004, and 2008 by the International Rice Research Institute (IRRI) to study the impact of rice research on poverty reduction (Hossain et al., 2006). The principal investigator of the initial (baseline) survey, Mahabub Hossain, undertook repeat surveys in 2000, 2004 and 2008 for additional analyses.

The baseline survey used multistage random sampling, with the sample size adjusted in each round to make it representative of the rural population for that year. In the first stage, 64 unions were selected randomly. In the second stage, one village from each union was selected that best represented the unions in terms of population density, land distribution, and literacy. Two villages were later excluded due to difficulties in administering the survey in their remote location. A census was conducted in the selected villages to stratify households according to landownership, land tenure, and literacy, and a random sample of 20 households was selected from each village, so that each stratum was represented by its probability distribution.

In addition to the original households and their offshoots, the 2000, 2004, and 2008 surveys included additional households from the same villages to address the sample attrition problem. Sample sizes for the repeat surveys were 1,880 in 2000, 1,930 in 2004, and 2,010 in 2008. From these, a total of 720 intact households have complete information on the variables of interest, providing a total of 2,160 observations for this analysis. The household identifier in the farm production module of the 1988 survey is missing which means that the 1988 round cannot be included in this analysis. Exclusion of the 1988 survey, however, does not hurt this study; the 2000, 2004, and 2008 surveys permit an understanding of the drivers of productivity over almost a decade after 2000, a period that was notably dynamic and relevant for this study.

Data collection for the surveys involved a semi-structured questionnaire to collect information on demographic details, land use, costs of cultivation, livelihoods, farm and nonfarm activities, commodity prices, ownership of non-land assets, income, expenditures, and employment. The data 13
sharply, from US$ 260 in 1970 to about US$ 170 in 1979, mainly because of the severe decline of the country’s agricultural production.

As already mentioned the cocoa sector has been deficient, long before the coming on stream of important oil field and subsequent oil-revenues. Cocoa exports fell from nearly 40,000 tons in 1968 to less than 20,000 tons at the beginning of the 1970s, following the departure of the foreign plantation owners and to about 7,000 tons a year after the exodus of some 30,000-40,000 Nigerian contract workers in the mid-1970s. Decline in the other agricultural sectors was equally striking; timber production declined from 360,000 cubic meters in 1968 to an annual average of 6,000 cubic meters in the late 1970s, and coffee and palm-oil production virtually disappeared. Since then the sector has barely recovered, on the contrary, the labor’s shortage remains persistent combined with the real effective exchange rate appreciation and the magnitude of oil resource, the very small traditional export sector seems not to be viable.

In addition Equatorial Guinea is a tiny country of 28,000 km<sup>2</sup> with a relatively small population estimated at about 506,000 inhabitants, therefore the traditional export sector cannot be significantly expanded<sup>26</sup> and the country does not have any specific comparative advantage in the traditional export sector. Continual mobilization of resources in the sector is costly because of the poor marginal return the sector can yield and in the same time it deprives the economy of critical resources needed to develop other strategic sectors, therefore constitutes a waste of resources. The traditional export sector will probably disappear due to the necessary ongoing reallocation of resources within the economy. The traditional export sector could then be substituted by the emergence of a competitive food production sector to warrant food security and limit the dependency on imported foods.

<!-- Start of picture text --> Equatorial Guinea: Imports of Goods and Services<br>1997 - 2006<br>140<br>120<br>100<br>80<br>60<br>40<br>20<br>0<br>1997-2001 2002 2003 2004 2005 2006<br>% of GDP<br><!-- End of picture text --> Source: Equatorial Guinean authorities Bank staff and IMF.

Natural resource endowment is a blessing if well utilized, to escape the poverty trap and a sound resource-led development strategy can make a difference, therefore it is 26 Although the country can import labor; however the strategy consisting of importing labor has always been the main flaw of the system and likely to increasingly be the case given the new oil-based economy and its spillover effects.

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**Figure 2:** Domestic government health expenditure as a percent of GDP, by region

<!-- Start of picture text --> 2000 2004 2008 2012 2016<br>East Asia & Pacific Europe & Central Asia<br>Latin America & Caribbean Middle East & North Africa<br>North America South Asia<br>Sub-Saharan Africa<br>10<br>8<br>6<br>4<br>2<br>Domestic gov health expenditure (% of GDP)<br><!-- End of picture text --> The overall trend in total spending in education is remarkably flat over time. On average, domestic spending on education as a share of GDP is equal to 4.6% of GDP in the period between 2012 and 2016, up from 4.5% in the period between 2000 and 2003. Trends in HICs, high middle and LMICs are in line with the overall trend. The only exception is among LICs, where education spending rose from 3.2% of GDP in the period between 2000-2003 to 3.9% in 2012-2016 (Table 4). However, among LICs, it is worth highlighting that South Asian and Sub-Saharan African countries followed completely opposite trends: while in the former, education spending dropped from 3.7% of GDP in 2000-2003 to 3.5% of GDP in 2012-2016, in the latter it rose from 3.8 to 4.2% of GDP (Table 5). When looking at trends in education spending across regions over time, the most worrying ones are observed for East Asia Pacific (EAP) and MENA. In 20002003, both regions were spending well above 5% of GDP in education (5.4 and 5.5 respectively), as opposed to 2012-2016 where spending represented 4.7 and 4.2% of GDP, respectively. Importantly, further analysis will be needed to understand to what extent this decline can be explained by differences over time in data availability. When looking at health and education spending, LAC stands out as being the region with steep increases in both sectors (Table 5).

The average spending for Social Protection programs, as defined in section II, is equal to 1.6% of GDP in the period 2012-2016, with Europe and Central Asia displaying the highest share (2%) and South Asia the lowest (1%). Conclusions about changes over time cannot be drawn given that each country only appears once in the ASPIRE data set.

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**_Energy demand models for policy_** **_<u>formulation</u>_**

# **WEM (World Energy Model)**

The World Energy Model used in the World Energy Outlook (WEO) publication of the IEA is a global energy market model. The model has evolved over time as the issues explored in the WEO change. The basic model has four main components: a final demand module, power generation module, fossil fuel supply and emissions trading. Figure A1.6 indicates the general model structure.

The final energy demand module follows the disaggregated end-use approach of forecasting by considering industry, transport, residential, commercial and agricultural activities. Both industry and transport are further disaggregated to take care of the specific features of demand. While the standard model considers a disaggregated level of analysis, due to data problems in developing countries, sometime a more aggregated representation is used. The economic activity, energy prices and other variables are considered as the main drivers of energy demand.

The power generation module considers the electricity demand and determines the new capacity addition need by taking into account a load curve, existing capacities, retirement schedule and reserve margin. A number of alternative technologies are considered for power generation and the levelised cost of generation is estimated. From the generation mix the fuel requirement is determined using the efficiency of plants.

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World Bank) are the appropriate weighting scheme. In contrast, for measuring living standards and aggregating welfare, PPP weights would be appropriate since they capture the consumption affordable to households for comparable consumption baskets.

While the theoretical purposes of the weighting schemes are clearly distinct, they also have different features in practice. First, PPP exchange rates are subject to greater measurement challenges. Since they are constructed from prices of the same baskets of goods and services, they rely on price surveys by the World Bank’s International Comparison Program (ICP; Callen (2007)). These are conducted infrequently and not available for all countries, hence subject to considerable measurement error and extrapolation to countries and years with missing data. PPP exchange rates tend to be more stable than market exchange rates (Schnatz, 2007). Hence, for weighting purposes, market exchange rates are typically fixed at the value of a specific year or period by the World Bank, and can therefore be influenced by short-term fluctuations that occurred in the chosen period.

The large majority of convergence studies have used versions of the Penn World Table (PWT) as a data source of PPP-adjusted income per capita due to its large coverage both the time and country coverage dimensions (Feenstra et al., 2015; Johnson et al., 2013). In recent iterations, the PPPadjustment is estimated on a time-varying basis, rather than simply using survey-based evidence from a particular year. The PWT version 9.1 is used in this box as a source of PPP-adjusted labor productivity levels and growth rates.

The productivity gap between advanced economies and EMDEs is substantially smaller once productivity is measured at PPP-adjusted exchange rates ( **Figure 12** ). The average EMDE worker produces 34 percent (16 percent at market exchange rates) of the output of the average advanced economy worker, while LICs produce 4 percent (2 percent when measured at market exchange rates). While the scale of productivity differentials relative to advanced economies is smaller under PPPmeasurement, the relative ordering of productivity levels between EMDE commodity exporters and importers, and EMDE regions, is largely unchanged. Oil-exporting EMDEs continue to have the smallest gap with advanced economies, followed by EMDE commodity importers and MENA has the highest output per worker among EMDE regions ( **Figure 12** ). In addition, the distribution of productivity retains its polarized structure, although the advanced economy and EMDE regions are significantly closer together.

To the extent that PPP-adjustments can accurately account for non-tradable pricing differentials between economies, productivity gaps are significantly lower. However, EMDEs still face a substantial productivity gap with advanced economies, requiring sustained high productivity growth to close.

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