rafmacalaba/datause-encoder-data huggingface dataset:
Policy Research Working Paper 9980

# **Abstract**

This paper estimates the effectiveness of government support to the private sector during the COVID-19 pandemic in El Salvador and Georgia using firm-level data collected before and during the pandemic. The two countries are selected because eligibility criteria for support involved pre-pandemic features of firms, as opposed to more prevalent criteria directly linked to firms’ experiences during the pandemic and that greatly exacerbate concerns about selection bias in estimation. Four outcome variables are studied relating to firms’ workforce, hours of operations, and expectations. Matching and panel estimation techniques are used on full and restricted samples, with the latter aimed at reducing selection bias. Government support appears to have helped firms avoid a reduction in operations in El Salvador, mainly through cash transfers, which also helped in terms of permanent workers, with the latter effect counteracted by wage subsidies. Smaller firms in Georgia appear to have benefited more from government support, mostly through fiscal relief, which was partially counteracted by wage subsidies that benefited larger firms more. The finding that smaller firms have benefited more helps raise confidence in the analysis as strong negative selection bias is expected in this context. Manufacturers of textiles and garments in El Salvador and hotels and restaurants in Georgia appear to have benefited from government support, but the patterns in other sectors are mixed and country-specific, highlighting potential complexities of attempting to target sectors.

This paper is a product of the Global Indicators Group, Development Economics. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://www.worldbank.org/prwp. The authors may be contacted at nkaralashvili@worldbank.org and mtamkoc@worldbank.org.

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent._ Produced by the Research Support Team
The revaluation of the renminbi reduces Chinese exports to the United States by more than a fifth ($43 billion based on 2004 trade figures), although total US imports decline by only 1.7 percent ($24 billion). Chinese sales of leather products, apparel and textiles are the most sensitive, falling by close to 27 percent. The decline in US imports from China is partly offset by increased exports from the rest of the world. Latin American sales grow by 0.5 percent, with South America benefiting the most. Exports of leather, apparel and textiles from the region grow by 1.5 percent, or 4.8 percent in the case of South America.

# **5.2 US trade policy**

We now turn to an assessment of how changes in US trade policy would affect imports from Latin America and China. We consider, first, the potential impact of preferential tariff access to the United States for Latin American exports resulting from the subscription of free trade agreements; and, second, the expected effects of the January 1st, 2005, Multi-Fiber Agreement quota elimination.

# **_5.2.1 Elimination of US tariffs on Latin American goods:_**

We first look at reductions in US tariffs on Latin American goods. The motivation for that is that since 1994, when the United States adopted NAFTA, the country has engaged in negotiations with other countries in the region to establish similar free trade agreements. In 2002 the United States approved an FTA with Chile; it recently finished negotiating the CAFTA and is holding negotiations with Andean nations to establish a similar agreement. Ultimately, the United States would eliminate tariffs on all Latin American countries under an FTAA.

We consider the elimination of US tariffs on imports from Latin America from their 2003 level; results are in Table 9. In the aggregate, the region's exports increase by 3 percent, although there is a wide variation among the different sub regions. The biggest increase would take place in Central America, with goods shipped to the United States expanding by 21 percent, driven largely by increased sales of leather goods, apparel and textiles, which grow by 36 percent. Indeed, for all Latin American sub regions, exports of the latter would grow the fastest: 21 percent for the Caribbean, 29 percent for Andean countries, and 36 percent for South American countries. The smallest increase in exports 14
|**Table 2: Impact of Minas Facil Expresso Introduction on**<br>**Dependent Variable:**Number of Firms Registeringin th|**Formalizat**<br>e Municip|**ion**<br>alityin a M<br>36-month|onth<br>Planned|
|---|---|---|---|
|Full<br>Sample|Common <br>Support|Nearest <br> Neighbor|Implementation<br>Candidates|
|_Panel A: Difference-in-Differences_||||
|Treatment Effect<br>-1.200***|-1.123***|-1.324**|-1.429***|
|(0.284)|(0.293)|(0.621)|(0.537)|
|_Panel B: Fixed Effects_||||
|Treatment Effect<br>-1.167***|-1.085***|-1.256**|-1.334**|
|(0.280)|(0.288)|(0.621)|(0.523)|
|_Panel C: Fixed Effects (dropping September 2011)_||||
|Treatment Effect<br>-1.189***|-1.096***|-1.195*|-1.235**|
|(0.278)|(0.287)|(0.638)|(0.524)|
|_Panel D: Fixed Effects (dropping the three municipalities_<br>|_introducin_<br>|_g program_<br>|_in Sept. 2011)_<br>|
|Treatment Effect<br>-1.037***|-0.956***|-1.096*|-1.161**|
|(0.267)|(0.274)|(0.598)|(0.504)|
|Sample Size<br>46,032|23,072|4,704|4,088|
|Number of Municipalities<br>822|412|84|73|
|Treatment Mean Sept 2010-Aug2011<br>12.55<br>Notes:<br>Panel A controls for the mean number of formalizations<br>2009 and 2010.<br>Sample sizes are for panels A and B.<br>Robust standard errors in parentheses, clustered at the<br>*, **, and *** indicate significance at the 10, 5, and 1 pe|12.55<br>in the mu<br>municipal<br>rcent level|12.55<br>nicipality i<br>ity level.<br>s respectiv|12.55<br>n each of 2008,<br>ely.|

18
_Africa’s Macroeconomic Story_

**Figure 8: Trend Real GDP per Capita Growth – Fragile States, 2012**

_Percent_ <!-- Start of picture text --> 6<br>4<br>2<br>0<br><!-- End of picture text --> _Source:_ World Bank _Global Economic Prospects_ January 2013.

# _The U-shaped growth pattern has been pervasive across countries_

The dispersion of trend growth rates across countries has been fairly stable over time (measured by the distance between the lower and upper quartiles in Figure 9). In the 1990s, growth exceeded 4 percent in four countries each year while over 20 countries registered declines. Over the past few years, growth has exceeded 4 percent in ten or more countries each year while only a few countries registered declines.

**Figure 9: Trend Real GDP per Capita Growth – Quartiles, 1962-2012**

_Percent_ <!-- Start of picture text --> 4<br>2<br>0<br>-2<br>-4<br>1962 1972 1982 1992 2002 2012<br>Population-weighted Median Upper/lower quartiles<br><!-- End of picture text --> _Source:_ World Bank _Global Economic Prospects_ January 2013.

16
Haddad, L., J. Hoddinott and H. Alderman (eds) (1997), _Intrahousehold Resource Allocation in Developing Countries,_ Johns Hopkins University Press, for the International Food Policy Research Institute.

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https://www.researchgate.net/publication/255573370_Constructing_a_Consumption_Aggregat e_for_the_Purpose_of_Welfare_Analysis_Issues_and_Recommendations_Concerning_the_POF_200 23_in_Brazil.

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Rose, E. (1999), “Consumption Smoothing and Excess Female Mortality in Rural India”, _Review of Economics and Statistics,_ 81:1, 41-49 Scott, C. and B. Amenuvegbe (1991), “Effects of Recall Duration on Reporting of Household Expenditures: an Experimental Study in Ghana", Social Dimensions of Adjustment (SDA) in sub - Saharan Africa working paper; no. 6. Surveys and statistics. Washington, DC : The World Bank.

Van de Walle, E. and A. Gaye (2006): “Household structure, polygyny and ethnicity in Senegambia: a comparison of census methodologies”, in Etienne van de Walle, ed. : _African Households : censuses and Surveys_ . New York, M. E. Sharpe Inc.

World Bank (2015), _World Development Report 2016: Equity and Development,_ World development report. Washington, DC : World Bank Group, Oxford University Press Xu, K. (2007), U-statistics and their asymptotic results for some inequality and poverty measures, _Econometric Reviews_ , vol. 26, n°5, pp.567-577.

Ziparo R. (2014) : “Why do spouses communicate? Love or interest? A model and some evidence from Cameroon”, JMP, https://www.semanticscholar.org/paper/Why-do-spouses-communicateLove-or-interest-A-model-Ziparo/2e0124f1b834641bf5b8297979d780da5cfa6286 34
# **Table 1: Contagion, Distance and Social Media—Actual Protests**

|Zero-Inflated Poisson||Protests|per millionp|ersons(t)||
|---|---|---|---|---|---|
||Distanc|e Only|Distance|*Common So|cial Media|
||||Social Me<br>|dia Penetratio<br>|n Threshold<br>|
||||**> 10%**|**> 20%**|**> 30%**|
||[1]|[2]|[3]|[4]|[5]|
|Protests pc (t-1)|0.033***|0.031***|0.031***|0.032***|0.032***|
||(0.006)|(0.004)|(0.004)|(0.004)|(0.004)|
|Neighbor's simple average protests pc*(t-1)|0.012<br>(0.015)|||||
|Inverse-distance weighted protests pc*(t-1)||0.022<br>(0.022)||||
|Inverse-Distance-Common Social Media weighted||||||
|Protest pc*(t-1)|||0.030|0.044*|0.047**|
||||(0.026)|(0.023)|(0.022)|
|Constant|Yes|Yes|Yes|Yes|Yes|
|Country fixed effects|Yes|Yes|Yes|Yes|Yes|
|Month fixed effects|Yes|Yes|Yes|Yes|Yes|
|Observations|7,728|8,256|5,340|3,324|2,652|
|Number of countries|92|97|67|47|40|
|N_zero|2776|2822|1584|781|626|
|Chi-square|18514|22090|16763|11038|9742|
|Loglikelihood|-5150|-5865|-4595|-3466|-2836|

Note: Robust standard errors in parentheses (*** p<0.01, ** p<0.05, * p<0.1). _Protests pc_ captures the number of protests per million persons. * denotes foreign protests. In columns [3],[4],[5], the threshold for a country to be defined to have large Facebook penetration is 10%, 20% and 30% respectively. Data are from January 2010 to January 2020.

The effects of protest spillovers become significant when the commonality in social media penetration between countries is considered as well. Columns [3],[4],[5] of Table 1 differ in the threshold of the definition for large social media penetration. In column [3], a country is defined to have large social media penetration if it has more than 10% of its population subscribed to Facebook in 2018. In columns [4] and [5], the threshold is 20% and 30% respectively. The dummy a penetrations and 0 otherwise. ii,jj<sup>takes the value of 1 if both countries have large social media</sup> aaPPc PPcc NNPPa ccNNmma The larger the threshold, the smaller the number of countries included in the sample—which by construction only includes countries with social media above the threshold. We can interpret the results as protest spillovers within a selected number of “connected” countries with high social media penetration. The three columns show that commonality in social media penetration between source and destination country of protests plays an important role in protest spillovers. The coefficients for (inverse distance-social media) weighted average global protests in the previous 9
factors, upstream innovations have permitted a representative Mexican fertilizer company to improve its operating margin by 9.7 percent.<sup>5</sup> Based on the Mexican case study, it was realized that the only way to get a meaningful sense of what is happening in such economies in terms of upstream-downstream linkages is to design a purpose-specific set of questionnaires. Available enterprise-level panel datasets were not sufficiently detailed to allow econometric analysis of these linkage issues. In particular, panel datasets generally do not include disaggregated data on the number of providers of specific logistics services employed by downstream users and conversely on the number of customers served by providers of innovative services. They do not allow inferences to be made about the relative importance of upstream innovations versus other locality-specific institutional factors on the level of costs and sales, and on the introduction of new goods and services by downstream firms. More generally, manufacturing censuses typically do not ask questions about changes in upstream business service availability and quality. As well, censuses generally are less comprehensive in their coverage of new entrants.

**Hypotheses.** The analysis begins downstream, by exploring the impact of innovative upstream services on user enterprises.  It then explores what factors drive or hinder the development by the upstream service providers of these innovations.

At the downstream user enterprise level, the hypotheses to be tested are: _H1: Improved performance in user enterprises is significantly positively associated with upstream innovations in business service delivery._ The focus is to explore the linkages between utilization of innovative road freight logistics services by user enterprises, on the one hand, and various measures of improved performance by user enterprises (especially cost reductions and revenue increases), on the other hand.

_H2: The benefits of upstream business service innovations as they impact on user enterprises are skewed towards larger and older, established enterprises within the intensive-use sectors._ The focus is to better understand the relative importance of variables such as enterprise size, age (start-ups versus more established firms), foreign ownership, and the legacy of state ownership in facilitating improved downstream performance.

> 5 See Dutz, Hayri and Ibarra (2000).

8
Table 7 – _Major constraints to the_ _<u>growth</u> - Continued_ _<u>from previous page</u>_

|**ICT**<sup>_∗_</sup>||**non-ICT**||
|---|---|---|---|
|Difculty<br>to<br>get<br>li-<br>|_<_1.0%|Lack of marketing services or|1.0%|
|cences/permissions<br>from<br>au-||transport facilities||
|thorities||||
|Inadequate premises/land|_<_1.0%|Difculty to export|_<_1.0%|
|Shortage<br>of<br>modern<br>machin-|_<_1.0%|Lack of raw material or lack of ac-|_<_1.0%|
|ery/equipment/physical capital||cess to raw material||
|Lack of transparency in ofcial or<br>government procedures|_<_1.0%|Workers absences|_<_1.0%|
|Too much competition /unfair|_<_1.0%|Too much interference by local of-|0.0%|
|competition from foreign frms||fcials||
|(including Israeli frms)||||
|Lack of technical know-how|_<_1.0%|Difculty<br>to<br>get<br>li-<br>cences/permissions<br>from<br>au-<br>thorities|0.0%|
|Workers absences|_<_1.0%|Inadequate premises/land|0.0%|
|Too much interference by foreign|_<_1.0%|Lack of transparency in ofcial or|0.0%|
|ofcials||government procedures||
|Lack of energy (electricity, fuel,|0.0%|Lack of energy (electricity, fuel,|0.0%|
|etc)||etc)||
|Difculty to engage with foreign|0.0%|Difculty to engage with foreign|0.0%|
|frms||frms||
|Use of intermediaries in order|0.0%|Use of intermediaries in order|0.0%|
|to get access to local markets<br>(within Palestine)||to get access to local markets<br>(within Palestine)||
|Other factors (specify)|2.0%|Other factors (specify)|3.3%|

_Notes:_ ICT<sup>_<u>∗</u>_</sup> excludes retailers and repairers. All options available are included in the table. _<_ 1.0% indicates a non-zero fraction. _Sources:_ Authors’ survey.

When asked directly whether they think that mobility restrictions affect the growth of their businesses, ICT answers are also similar to other firms (table 8). Differences in answers between industry groupings are not statistically significant with only a few exceptions. More than half of ICT firms answered that obstacles have an impact on the mobility of people, compared to virtually 40% of other firms, consistent with the fact that ICT workers are commuting for a longer distance, but the difference is not statistically significant. Firms were less likely to see obstacles to the mobility of goods as an obstacle, and, interestingly, ICT firms were significantly more likely to mention obstacles to the mobility of goods in and out of the West Bank as a factor affecting growth. The proximity to settlements and to areas of clashes was perceived as less important for growth.

Obstacles have also a similar effect on ICT and on other firms (table 9). As a direct 23
The result that both worker flows and job flows have been accelerating in recent years is complemented by other work as well. Castellanos, García-Verdú, and Kaplan (2004) show that the percent of workers with nominal-wage freezes has been declining dramatically in recent years, while both nominal-wage increases and nominal-wage decreases have been increasing. Budar-Mejía and García-Verdú (2003) estimate the probabilities that a worker moves from the formal sector to the informal sector and vice versa. They find that both probabilities have been increasing over time, that is, that transitions from the formal sector to the informal sector are becoming more common as are transitions from the informal sector to the formal sector. The results from the two papers above, combined with the results on worker flows and job flows in the present paper, paint a clear picture. The labor market in Mexico has become more dynamic in recent years.

Table 2 also presents the two decompositions of job creation and destruction mentioned in the methodology section. Job creation is separated into the component due to establishment births and the component due to establishment expansions. Analogously, job destruction is separated into the component due to establishment deaths and the component due to establishment contractions.

# **4.4 Flows by Age and Size of the Firm**

Before turning to some of the more novel results of our paper, we first show that some of the other stylized facts of job and worker flows also appear to be true in Mexico. Table 3 presents averages of worker- and job-flows statistics for the period 1996-2001 for several establishment-age categories beginning with establishments that are at least one year old but less than two years old. Each successive age category is one year older than the previous category, until we reach the maximum category of 11 years old or more. Since our data begin in 1985 we 14
18 much less is known about the dynamics of economic adjustment, the timing and phasing of retorms -- about how to get from here to there. Eccnomists are even less prepared to advise individual nations as to what political roads to follow and what institutional mechanisms to build. Furthermor-, key development choices, such as income distribution, the role of government, the composition of taxes, and the structure of the educational system, are heavily political and must be carefully thought out for country-specific application.

# Social Equity

Both the Bank and the Fund have been stating with increasing frequency that their programs should take into account the social costs of adjustment. As IMF Managing Director Michel Camdessus has affirmed: "macroeconomic policies can have strong effects on the distribution of incomes and thus on social equity and welfare. A responsible adjustment program must take these effects into account, particularly as they impinge on the most vulnerable or disadvantaged groups of society. " 2 Poverty alleviation and equity are thus officially sanctioned objectives, and many adjustment programs now include measures aimed at improving the distributional impact of government interventions (for example, by reducing subsidies to the middle classes and more carefully targeting social -programs) and at compensating those who must inevitably siffer during the adjustment process (by providing severance payments, public works employment, and nutrition programs). Yet these welfare objectives remain secondary to efficiency objectives in the policy-based lending programs of the Bretton Woods age%icies.

12. "The IMF's Support for Growth-Oriented Adjustment in Africa," remarks before the U.S. Chamber of Commerce, Washington, D.C., March 26, 1990, reprinted in IMF Survev, April 2, 1990, p.<sup>108</sup> .
S.

# CONTENTS

|1.|D~escriptionof Funds..........................<br>1<br>¶Typesof Funds<br>.<br>..<br>..<br>.<br>...<br>..................<br>2|
|---|---|
||Strctr<br>of Funds<br>.<br>3|
|2.|Funct:osofVoucherFunds<br>.<br>_5_<br>|
||Porttflio Diversfilcation.<br>. .........<br>........<br>_S_<br>|
||I?rttblo Se,.<br>.....<br>.<br>.<br>_6_<br>|
||Cor1poate Govirenigce...................<br>_9_|
|3.|MvodlelsofCorporateGovernance..<br>................<br>_9_|
||DispOersedOw<br>nershi.<br>10|
||InstitationalOwncrship<br>.'.<br>11|
||Holding Companies....................<br>11|
|4.|Governance in the Czech ai'd Slovak Republics .<br>...........<br>13|
||Governance Boards.....................14|
||Owvnership Structure..................<br>17|
||<br>Comparison with, Other Countries .<br>..............<br>18|
||,icperiencetoDate<br>..<br>19|
|_5._|T1'bxeEnterprise,CaseStudies..<br>...............<br>23|
||SUCCCSSfbl<br>CoMpany .........<br>..........<br>23<br>S<br>|
||Avrd<br>Conipaiy....................<br>24<br> <br> <br><br> <br>RecommedatifionS.4|
||F<br>gCompany.........................<br>25|
|_6._|Fund Be<br>h<br>aioor<br>26|
||Shirking........................27|
||SelfIDeaing ......................<br>28|
||THghRisk investments ...................<br>29|
|7.|Cpticn for Regulation....................<br>30|
||Promote Competition....................32|
||ReqireGreterDisclosure..................33|
||Ices<br>Rights of Fund Ownes..34|
||ContmolFund Operations..................38|
||TLimitFund nv;stmn<br>..<br>40|

References .. 47