rafmacalaba/datause-encoder-data huggingface dataset:
investment, this threshold can be motivated as a fixed cost of investing in research and development.

The expected output of R&D depends on the size of the firm, since there may be economies of scale in R&D or complementarities with other inputs, and since the revenue from an innovation will depend on the total sales of a firm (Cohen et al. (1987)). Now, if financial development has a differential effect by firm size on the cost or availability of external funds for R&D, then yijc will depend on Sizeijc interacted with financial development. Thus, where γjc are country-industry dummies, FinDevc is a measure of the financial development of country c, and GDPc measures its income level. Financial development tends to be highly correlated with the total income level of an economy. It is possible that the size of the domestic market matters differentially to small and large firms. So in the above expression, as a control, I also allow national income to have a differential effect on R&D profits. Note also that the country-industry dummies absorb FinDevc and other country or industry level variables. Now, Assuming that ǫijc is normally distributed, the coefficients in the expression for yijc can be estimated by a probit model.<sup>16</sup> How does one interpret the coefficient α on the interaction of firm size with financial development? Owing to the non-linearity of the expression (equation 2) for the probability of doing R&D, the interaction coefficient cannot be interpreted the same way as in a linear probability model.<sup>17</sup> It is more straightforward to use equation 1 and interpret α and its estimated standard error in terms of the underlying linear model explaining the latent variable yijc − y<sup>∗</sup> , the expected profit (net of sunk costs) from entering into R&D. A negative α would indicate that financial development is associated with a higher net profit from R&D to small firms relative to large firms. Assuming that correlates of financial development do not have a differential effect by firm size on revenue from R&D, this would suggest that financial development lowers the cost of R&D financing to small firms relative to large firms.

To verify that the coefficient on the interaction of firm size with financial development does indeed reflect the financial channel, I test if the interaction effect is stronger in industries with a higher Rajan-Zingales measure of dependence on external finance (FinDep), estimating a Probit in which If the sign of the coefficient on the Sizeijc ∗ FinDevc term in equation 2 reflects the heterogenous effect of financial development, then I expect the coefficient on Sizeijc ∗

> 16Since the data consist of pooled country surveys, the estimation results in the paper report standard errors allowing for the clustering of errors by country.

> 17The parameter of interest, the cross derivative of P r(rijc = 1) w.r.t Size and F inDev, is not α but a more complicated expression involving all explanatory variables, μ, α and the normal density function. See Ai and Norton (2003) for a discussion on interaction terms in logit and probit models.

9
16

**Figure 2: Macroeconomic policy reform and poverty trends**

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*  ~~~~6<br>-2 0  -1.5  -1.0  -0.5  o.o  0.5  1.0  1.5  2.0  2.5  3.0<br><!-- End of picture text -->

**Change mscroecononice policy score**

# **_Institutional change andpoverty trends_**

There is an accumulation of convincing empirical evidence pointing to the importance of political stability and good governance for growth and poverty reduction (Alesina and Perotti, 1994; Knack and Anderson, 1995; Collier, 1999; World Bank, **2001).** While the construction and consolidation of good indicators of political stability and good governance remain work in progress, the composite political risk index of the International Country Risk Guide (ICRG), and subsets thereof, have been frequently used by researchers to exarnine the effect of govemance and institutional quality on growth and poverty. The composite index consists of 12 components covering different aspects of political stability (for example, government stability, internal conflict, external conflict), governance and institutional quality (for example, corruption, democratic accountability, bureaucracy quality). The key advantage of the ICRG index is its broad coverage across countries and over time (1985 to curTent).tl Evaluations of the different aspects of the index are provided by a private consultancy.

" The different cornponents of the ICRG political risk index (miaximwn scores in brackets) are govermnent stability (12), socio-econonmic conditions (12), investmnent **profile** (12), internal conflict (12), external conflict ( 12), corruption ( 12), military in politics (6), religion in politics (6), law and order (6), ethnic tensions (6), democratic accountability (6), bureaucracy quality **(4).** The maximumn score is 100 with a
classified as economic opportunity, technological opportunity and appropriability (Levin et al. 1985, Cohen and Levin 1989). These comprise the second group of factors. Within these broad categories, several firm, industry, and country characteristics have been identified. Details follow.

Schumpeter (1942) argued that grater market power encourages R&D by reducing the uncertainty associated with excessive rivalry between competing firms, increasing appropriability of the results of investment in R&D, and by increasing returns from R&D activity. However, others argue that the opposite is also possible. That is, greater market power may discourage innovation due to greater inertia or the creation of oligopolistic rents that would be destroyed by innovation (Arrow 1962, Scherer 1980, Porter 1990). Empirical evidence on the issue is also mixed. Some studies report a positive impact of greater market power on R&D activity (Crepon et al. 1998, Blundell et al. 1999, Nicholas 2003); other studies report a negative impact (Geroski 1990, Harris et al. 2003, Cohen 2010) or no impact (Broadberry and Crafts 2001). Yet others report a U-shaped relationship (Aghion et al. 2005). Some recent work suggests a positive effect of competition on innovation in firms or industries that are close to the technology frontier and a negative or no effect otherwise (Aghion et al. 2009, Amiti and Khandelwal 2013). As Symeonidis (2019) points out, the mixed results have led several surveys of the empirical literature to conclude that there may be no general relationship between market power and innovation and that industry characteristics such as appropriability conditions, demand and especially technological opportunity explain much more of the cross-industry variation in innovative activity than market power or market structure.

The importance of firm size for innovation activity has been extensively discussed. Following Schumpeter (1942), several arguments have been put forward to support the hypothesis that R&D increases more than proportionately with firm size. This happens because relatively large firms benefit from economies of scale and scope in R&D technology, more efficient 13
- 2 -

# **I. INTRODUCTION**

Following a large buoyancy in public-private partnership (PPP) transactions in the telecommunications and electricity industries, some water supply and sewerage services are also provided under the PPP framework. However, there has been a mixed picture of the water-sector PPP performance. Some experiences are praised, and others are not. The failure is partly attributable to design flaws in their auction mechanisms. One of the alleged concerns is that there is little market competition at the auction stage. It is not unusual that a PPP transaction in the water sector has no competition even under competitive bidding circumstances.

In designing an auction for PPP infrastructure transactions, one of the most important policy decisions for the auctioneer is whether to bundle or unbundle potentially relevant transactions for optimizing the size of contracts. The current paper examines the possibilities of improving efficiency in water-sector PPP auctions and discusses whether or not the current choice of contract size is appropriate. There are two factors that potentially determine the optimal contract size: competition in the auctions and economies of scale in operation. The two factors may or may not be compatible with one another. Dividing a project into small contracts may look like an attractive approach for the auctioneer, because it will encourage more prospective firms to participate in the auction process. At the same time, however, the possible benefits from economies of scale and scope, which infrastructure construction, operation and maintenance usually exhibit, may have to be sacrificed.

In general, the degree of competition at the PPP-related auctions tends to be low. Particularly in water-sector transactions, competition has been minimal (e.g., Foster, 2005). As per the Private Participation in Infrastructure Project Database (hereinafter referred to as PPI Database), the average number of firms that participate in a PPP auction ranges from three to six, depending on sector. In the water and sewerage sector, the average is about 3.6, which is unfavorable compared with other infrastructure sectors. Of particular note, in the Latin America and the Caribbean (LAC) region, the average number of participants in each water-
having work centrality, tenacity, and optimism traits increase their likelihood of employment. Interactions of gender role attitudes and personality traits, however, make some of these traits lose their significant effects, especially for women deciding on being employed.

The study also found the significant roles played by individual traits in the nature/type of employment (i.e., wage vs. self-employment) that women and men engage in. For men, being organized increases their likelihood of wage employment outcomes, although traditionalism tends to reverse this effect. Among women, impulsiveness appears to reduce their likelihood of of being employed in wage jobs. Like the results for males, traditionalism tends to reverse the direction of impact such that traditional and impulsive women have higher probability of being employed in wage jobs. These results, in general, suggest that while personality traits play an important role in observed employment outcomes, these effects are often dampened or reversed with increasing traditionalism.

Employment policies may need to focus on the development of soft skills in order to improve labor force participation and employment in the Ghanaian settings. Additionally, labor market policies that address certain constraits facing women and other general work should be encouraged. Policies that improve access to education and child care are also recommended.

# **References**

- Affum-Osei, E., Asante, E.A., Forkouh, S.K., Aboagye, M.O., and Antwi, C.O. (2019). Unemployment trends and labor market entry in Ghana: job search methods perspective, _Labor History_ , 60(6), 716-733. DOI: 10.1080/0023656X.2019.1640356

- AHIES (2022) Ghana Annual Household Income and Expenditure Survey – Quarterly Labor Force report. Ghana Statistical Service (2022) <u>https://www.statsghana.gov.gh/gssmain/fileUpload/pressrelease/AHIES%202022%20Q1 %20and%20Q2%20Labor%20Force%20Report.pdf</u>

- Alesina, A., Giuliano P., and Nunn N. (2013). On the Origins of Gender Roles: Women and the Plough. _The Quarterly Journal of Economics 128_ (2): 469–530.

- Aminu, A. (2010). Determinants of participation and earnings in wage employment in Nigeria. 5<sup>th</sup> IZA/World Bank Conference: Employment and Development Cape Town, South Africa May 03-May4, 2010.

- Atasoy, B.S. (2017). Female Labor Force Participation in Turkey: The Role of Traditionalism. _Eur J Dev Res_ 29, 675–706. https://doi.org/10.1057/s41287-016-0013-z

- Baah-Boateng, W. (2014). Determinants of Unemployment in Ghana. _African Development Review_ , 25(4), 385–399.

- Baah-Boateng, W. (2015), "Unemployment in Ghana: a cross sectional analysis from demand and supply perspectives", _African Journal of Economic and Management Studies_ , 6(4), 402-415. https://doi.org/10.1108/AJEMS-11-2014-0089

19
Tabel 19 The current state of school attendance in the cities where foreign residents concentrate to live

*The current state of school attendance of foreign residents ready for school (2002)

||School age<br>foreign<br>resident|The number of<br>school<br>attendance|The enrollment<br>in foreign<br>school|The number of<br>school non-<br>attendance|Rate of school<br>non-attendance|
|---|---|---|---|---|---|
|Ota City,Gunma|502|233|91|178|35.5%|
|Oizumi Town,Gunma|646|313|109|224|34.7%|
|Iida City,Nagano|195|149|0|46|23.6%|
|Hamamatsu City,Shizuoka|1,556|873|358|325|20.9%|
|Iwata City,Shizuoka|270|118|91|61|22.6%|
|Kosai City,Shizuoka|169|116|unknown|58|34.3%|
|Fuji City,Shizuoka|274|191|0|83|30.3%|
|Toyohashi City,Aichi|1,100|644|250|206|18.7%|
|Toyota City,Aichi|819|431|236|75|9.1%|
|Ogaki City,Gifu|364|212|unknown|152|41.8%|
|Kani City,Gifu|258|91|74|93|36.0%|
|Minokamo City,Gifu|238|110|74|54|22.7%|
|Yokkaichi City,Mie|461|274|109|78|16.9%|
|Suzuka City,Mie|497|167|50|280|56.3%|
|Total|7,349|3,922|1,442|1,913|26.0%|

Sources:Gaikokujin Shuju Toshi Kaigi (Congress of Major Cities where Foreign Residents Concentrate to Live) 41
6 Given these concerns, this review asse-es whether the stabilization targets and projected adjustment outcomes during the mediuwn-term scuarios of the PFPs have been reasonable or whether they reflect excessively optinistic assumptions regarding policy progress and supply response to policy re forms. A related pulpose of this paper - partiularly relevant for countries where SAP a.ud ESAF operations of the ABF are - coming to an end is to assess whether stabilization targets set out in PFPs, supportd by SAPs and ESAPs, were met.

This note is organized as follows: Secton I presents an overview of the firdings, including aggregated results for the Region. Section m presents aggregat-' results by grouping these countries according to selected characterics in order to identify whether there is any systematic pattern emerging from the groupings. The final section summarizes the findings of die paper and suggests some steps that the Regional staff may take to make the PFP targets and projections more realistic. The note has two annexes - - Annex I presents the picture country by country, along with country graphs and tables, and Annex I gives the results by analytical groups along with relevant graphs and tables.

The paWer compares acual outcomes with projected values of selected macroenomic variables in PFPs of the Africa Reg;on. The oojective is to throw light on two central aspects of the adjustment programs: (a) how well the stabilization targets as reflected in the projections are being met, and (b) what has been the actual response
21 64. However, water markets are not a panacea. And because of water's unique characteristics, an effective tradable water rights system is not easy to introduce. There are high transactions costs. In addition, an unregulated water market also could lead to environmental problems and monopolies. It could also result in under-investment in activities that may be socially but not privately profitable. However, these same characteristics make administrative solutions to water allocation difficult. As shown by the experience of Chile, water markets rarely make them worse. The challenge is to decide when water markets are a better alternative and to enact legislation to establish them. The design and implementation of the legislation should involve all those that have a stake in how water is used. It should also pay particular attention to the initial allocation of water rights, to the creation and maintenance of a water rights registry, and to ensuring that the rights of third parties are respected. As with any system, public authorities will also need to design and enforce environmenta **l** aws and to subsidize those high-return activities where the benefits accrue to persons that are not sharing in their costs.

_65._ One striking aspect of the debate on water markets versus administrative methods of water allocation is the lack of empirical evidence regarding many of the key issues. This is not surprising since transactions costs and institutional considerations are notoriously hard to quantify. Nevertheless, in a debate of such importance the absence of data is hampering reasoned discussion. Some efforts are underway to remedy this problem but much more needs to be done.<sup>3</sup> Further investigation of water markets that are currently working is required as well more work on the inadequacies and shortcomings of administered solutions to problems of water scarcity. Given the widespread perception of failure of governments in developing countries to solve problems of scarcity by administrative fiat, many people feel that the burden of proof on the superiority of an admninistered approach is on its advocates. Additional evidence will allow the alternatives to be compared and evaluated more objectively.

3. While some studies such as Hearne and Ester (1995) have attempted to measure the gains from water trades, such studies have not attempted to compare the institutional and investment aspects of market-based versus administered solutions.
across different decades and to school-age children only, cross-country gaps in performance are quite persistent over time, suggesting that these measures of cognitive skills are to a large extent relevant for the current labor force as well.

The calibration of (6) is once again based on micro-economic evidence from log-wage regressions. In particular, _δ_ is the coefficient on test performance in a regression that includes years of schooling as a control. It is important to focus on regressions that include both variables as controls, since cognitive skills and educational attainment are likely to be positively correlated, and omitting one will inflate the contribution of the other. I follow the calibration proposed by Hanushek et al. (2017), based on a comprehensive review of the evidence, according to which _β_ “ 0 _._ 08 and, when test scores are express in terms of individual-level standard deviations, _δ_ “ 0 _._ 17.

Table 2 shows the development accounting results. For comparison purposes, I report the results when using educational attainment only (and _β_ “ 0 _._ 10) on the sample of the 81 countries for which test scores are available. Accounting for cognitive skills increases slightly the human capital gap between the United States and the poorest countries, and decreases the corresponding gap between the United States and the other high-income countries. This reflects the fact that the average test performance students in the United States, while substantially superior to the one of students in many developing countries, puts them only at the 65<sup>_th_</sup> of the international distribution. Indeed, measures of cognitive skills are more effective in explaining income gaps between East Asian countries on one hand, the top performers in standardized tests, and low- to middle-income countries on the other (Hanushek and Woessmann, 2012b). Overall, the result of these patterns is that the _Success_ measures increases by about 5 percentage points compared to the specification including educational attainment only.

# **4.3 Health and Experience**

Other strands of the literature have contributed to the development accounting debate by attempting to measure directly different aspects of human capital. In this subsection I focus on health and experience.

Weil (2007) proposes to use the survival rate to the age of 65 as a proxy for the health status of the population. This is an attractive measure, since it implicitly reflects the incidence of all possible types of sources of mortality, and at the same time is available for a large sample of countries. I follow Weil (2007)’s approach in assuming that human capital per worker takes the form 14
- Emran, M. S. and Shilpi, F. (2011). Intergenerational Occupational Mobility in Rural Economy: Evidence from Nepal and Vietnam. Journal of Human Resources, 46(2):427458.

- Emran, M. S. and Shilpi, F. (2015). Gender, Geography, and Generations: Intergenerational Educational Mobility in Post-Reform India. World Development, 72:362380.

- Emran, M. S. and Shilpi, F. (2021). Economic approach to intergenerational mobility: Measures, methods, and challenges in developing countries. In Iversen, V., Krishna, A., and Sen, K., editors, Social mobility in developing countries: Concepts, methods, and determinants. Oxford University Press.

- Filmer, D. (2007). If you build it, will they come? School availability and school enrolment in 21 poor countries. Journal of Development Studies, 43(5):901928.

- Hanushek, E. A. (2002). Publicly provided education. In Auerbach, A. J. and Feldstein, M., editors, Handbook of Public Economics, volume 4, chapter 30, pages 20452141. Elsevier.

- Heckman, J. and Mosso, S. (2014). The Economics of Human Development and Social Mobility. Annual Review of Economics, 6(1):689733.

- Heneveld, W. (1979). Indonesian education in the seventies: Problems of rapid growth. Southeast Asian Aairs, pages 142154.

- Hertz, T., Jayasundera, T., Piraino, P., Selcuk, S., Smith, N., and Verashchagina, A. (2008). The Inheritance of Educational Inequality: International Comparisons and Fifty-Year Trends. The B.E. Journal of Economic Analysis & Policy, 7(2):148.

- Hilger, N. G. (2015). The great escape: Intergenerational mobility in the united states since 1940. Technical report, National Bureau of Economic Research.

- Iversen, V., Krishna, A., and Sen, K. (2019). Beyond poverty escapes _−_ social mobility in developing countries: A review article. World Bank Research Observer, 34(2):239273.

- Jayachandran, S. (2015). The Roots of Gender Inequality in Developing Countries. Annual Review of Economics, 7(1):6388.

- Jung, D., Bharati, T., and Chin, S. (2021). Does Education Aect Time Preference? Evidence from Indonesia. Economic Development and Cultural Change, 69(4):14511499.

- Khanna, G. (2023). Large-scale education reform in general equilibrium: Regression discontinuity evidence from india. Journal of Political Economy.

- Levine, D. and Kevane, M. (2003). Are investments in daughters lower when daughters move

34