World Bank's Development Report Research Articles

Equity, Efficient and Inequality Traps: A Research Agenda

This paper discusses a research agenda that arises from unanswered questions and unresolved issues considered in the World Bank's World Development Report 2006: Equity and Development. After formalizing the key concepts of equity; equality of opportunity; and efficiency, and proposing a definition for an equitable development policy, the paper discusses the concept of inequality traps, around which the research agenda is structured. Four broad groups of research questions are highlighted: those revolving around the measurement of inequality of opportunity and the diagnostics for the existence of an inequality trap; those dealing with the causes of inequality traps; the quantification of their efficiency costs; and those related to how institutions (including governments) evolve to overcome inequality traps.

From Public Concern to Policy Effectiveness: Civic Conservation in Developing Countries

An earlier version of this article appeared as a background paper for the World Bank's World Development Report 2003. Additional material draws on case studies produced under the author's direction at the RARE Center for Tropical Conservation, with research assistance from Cristin Tighe and Mary Ann Kutny. The author wishes to thank Russell Dalton for timely access to data from the GEOS survey.

Money Growth, Output Growth, and Inflation: A Reexamination of the Modern Quantity Theory's Linchpin Prediction

1. IntroductionOver the years, the quantity theory of has been extended and refined. All versions, however, begin with the well-known equation of exchange, MV = PQ, where Q is the level of national output (real gross domestic product, GDP), P is the general price level, V is the velocity of circulation, and M is the quantity of money. To convert this equation--actually an identity--into a theory, one of the four variables contained therein must be specified as functionally dependent on the other three. Monetarists argue that P is the dependent variable (Sprinkel 1971). Specifically, they argue that M is determined by the national monetary authority; that V is determined by a variety of both secular and cyclical factors;1 that changes in V do not consistently offset changes in M; and that Q is determined by capital, labor, and technological advances (Sprinkel 1971).The monetarist theory of inflation is a long-run theory; it does not purport to explain short-run increases in the general price level (Hafer and Wheelock 2001). Monetarists argue that short-run inflation stabilization is not feasible and, therefore, that monetary policy should be confined to inflation concerns over a relatively long horizon.2John Moroney (2002, p. 399) asserts that in the traditional version of the quantity theory, ... a country's long-run inflation rate increases [one-to-one] with its rate. The modern wrinkle is that inflation is mitigated by real GDP growth (emphasis added). This assertion is consistent with the famous dictum of Milton Friedman (1968, p. 18) that ... inflation is always and everywhere a monetary phenomenon, produced in the first instance by an unduly rapid in the quantity of money (emphasis added). Friedman's assertion is not that an increased rate is the sole cause of inflation in the long run--just the most important cause (Friedman and Friedman 1980). An increase in inflation can also be caused by a decrease in the rate of Q (or, theoretically, even an increase in the rate of V), as is easily seen by solving the equation of exchange for P and then taking logs and first differences.After taking logs and first differences,3 Moroney (2002) obtains an estimating equation in which inflation is functionally dependent on the rates of the stock and real GDP:(Formula Omitted. See article image.) where Y is Δ ln P, X is Δ ln M, Z is Δ ln Q, and u is a random disturbance term that includes velocity changes. (Δ is the first difference operator.) The modern quantity theory's model-implied restrictions--which are testable predictions--are that the intercept is zero, the coefficient of the stock rate is plus one, and the coefficient of the rate of real GDP is minus one. Arguably, this joint hypothesis is the linchpin prediction of the modern quantity theory: If the hypothesis is rejected by the data, the theory falls.Using long-run (1980-1993) cross-section data on 81 countries, which he takes from the World Bank's World Development Report 1995, Moroney (2002) tests the joint hypothesis (β0 = 0, β1 = 1, β2 = -1) and incorrectly claims that the hypothesis cannot be rejected at even the 0.01 level of significance.4 As will be shown in the next section, the joint hypothesis is rejected decisively. Fortunately, however, it will also be shown that a modification to Moroney's model specification helps to salvage the most substantive part of the modern quantity theory's implied restrictions.2. Modification to the Quantity Theory SetupIn contrast to the conventional quantity theory setup, in which the economy's real activity is determined entirely outside its monetary sector (Fama 1982; Moroney 2002)--that is, in which no provision is made for the possibility that the monetary authority's actions could have an adverse effect on output5--the present article entertains the possibility that Y and Z are jointly determined. …

Spatial Dimensions of Global Governance

Neil Brenner, Bob Jessop, Martin Jones, and Gordon Macleod, State/Space: A Reader (Oxford: Blackwell Publishers, 2003), 355 pp. Saskia Sassen, ed., Global Networks, Linked Cities (London and New York: Routledge, 2002), 368 pp. Allen J. Scott, ed., Global City-Regions (Oxford: Oxford University Press, 2002), 467 pp. John Friedmann, The Prospect of Cities (Minneapolis: University of Minnesota Press, 2002), 194 pp. Groupement Economie Mondiale, Tiers-Monde, Developpement (GEMDEV), under the direction of Annick Osmont and Charles Goldblum, Villes et citadins dans la mondialisation (Paris: Karthala, 2003), 300 pp. World Bank, World Development Report 2003: Sustainable Development in a Dynamic World (Washington, D.C.: World Bank, 2003), 250 pp. Organization for Economic Cooperation and Territorial Outlook (Paris: OECD, 2001), 291 pp. Integrating Rural Development and Small Urban Centers: An Evolving Framework for Effective Regional and Local Economic Development, seminar summary from the Rural Development-Urban Development Joint Seminar, World Bank/IFC Headquarters, Washington, D.C., 18-19 March 2003. United Nations Centre for Human Settlements (UN Habitat), Cities in a Globalizing World: Global Report on Human Settlements 2001 (London: Earthscan Publications, 2001). Spatial development focuses on geographical areas as opposed to sectors or issues. Spatial policy is important because it attempts to tackle global problems and to unite and motivate people. This review examines a number of books and reports that help to realistically relate trends to a norm-driven spatial vision or strategy. Two major problems need addressing. The first is that modernization is pushing the globe in directions that deny many of the ends of the good life for different (any bounded space) and put the environment of the planet at risk for future generations. New spatial visions may be a dialectic join of history and its current unfolding but ought not be dismissed out of hand as mere nostalgia or ideology. Economic growth is a means and not an end--and not the only means. In this review essay, the megacities with sharpening social fragmentation are given as the major examples with repercussions to all other problems. The second is part consequence of the first--that bonds of spatial and social order have broken down with increased interdependency and not been replaced by a new and acceptable global order. The form of spatial governance and government from village to global is taken as the major issue area, and the books are examined for problem trends, objectives, and pathways where the means of global norms and action can begin to move. Global dialogued norms can do three things: set the global spatial vision broad enough to reconcile urban dynamics with rural respect for nature everywhere; give the framework in which bounded communities can decide their own futures; and define transgression and grade intervention by a higher spatial level in the affairs of a lower level--including social justice between communities and the preservation of order. There are two conceptions of vision in the literature: interpretive vision devises strategies to address anticipated spatial development trends; norm-driven vision aims to control and to circumscribe these trends. The prospect of forty-two new megacities inhabited by more than 10 million people being created over the next fifty years, with only one in the developed world, is unsettling. In 2001, of seventeen megacities, four are in developed countries. (1) What is the strategic vision contained in the World Bank's World Development Report 2003 that encourages both global and in-country migration? The report claims that the demand for low-cost labor in developed countries and the supply in poor countries will grow. Neither megacity multiplication nor massive migration flows are victories but rather the defeat of spatial vision. …

Global Burden of Disease: Huge Inequities in the Health Status in Developing and Developed Countries

This paper outlines the Global Burden of Disease study which was conducted for the 1993 World Bank Development Report. The study revealed huge differences in premature death and disability in the world regions examined; sub-Saharan Africa and India had the highest burden of disease. This paper also examines how the large differences in burden of disease between developed and developing countries can be explained by economic factors, highlighting research findings that suggest egalitarian societies are likely to have better health status than countries with capitalistic, market-based economies. This study then examines the efforts of the Global Forum for Health Research to create an integrated approach to global health policy formulation, using global burden of disease data, and concludes with the assertion that adopting such an approach nationally would also assist developed countries like Canada in better dealing with future health challenges.

The Development of an Integrated E-Commerce Marketing Framework to Enhance Trading Activities for Rural African Communities

AbstractThe World Bank Development Report on poverty findings (2000) posits that at the macro level the most effective antipoverty policies are those that enhance the efficiency of markets used by poor people. However, the report has little evidence to show that microeconomic development, particularly in social, political, cultural, and human assets, has been implemented successfully to support market efficiency and effectiveness in these rural communities. Although there has been some introduction of Information and Communication Technology (ICT) in rural communities, a significant proportion of the research work in ICT and rural development is speculative and often offers little more than project progress reports. An intensive case study on a rural African community reveals that poor market access might not be simply an ICT problem. The missing link appears to be the inability of rural communities to optimize existing facilities and resources. A more fundamental cause could be the lack of microeconomic reforms in these communities, resulting in ineffectually applied marketing skills, poor leadership and management ability, low status and power of women, inadequate financial knowledge, and insufficient technical and information technology knowledge. Hence, an integrated e-commerce marketing framework is put forward to resolve the problems mentioned. The development of this proposed model should be consolidated by further studies using the Participative Action Research approach.

Health systems and maternal and child survival in Central Asian Republics.

To describe the status of health care systems in five Central Asian Republics (CAR): Kyrgzstan, Kazakhstan, Uzbekistan, Turkmenistan, and Tajikistan, with particular attention to women's and children's health. Changing mortality profiles are investigated using the "protracted-polarized" model of epidemiologic transition. Empirical evidence was drawn from the World Health Organization (WHO) database for the region, along with additional evidence presented at a maternal-child health conference held in Bishkek, Kyrgyzstan, on November 11-14, 1998. The conference was sponsored by the Albert Schweitzer Institute and the Soros Foundation. This evidence is evaluated for completeness, validity, and reliability. Trends are identified using the 1998 and 1999 World Health Reports and 1999/2000 World Bank Development Report. Incomplete data prohibited comprehensive analysis. Available data indicated high but variable rates of maternal and child mortality and overall declines in health status and the health care infrastructure in the 1990s. Data collection and analysis from this part of the world are often incomplete and unreliable. Future research should focus on improving maternal and child health indicators by enhancing resource sharing and opportunities for international collaboration.

The real and the nominal? Making inflationary adjustments to cost and other economic data.

Given the scarcity of cost data for health interventions, there has been substantial use of a relatively small number of existing studies to underpin policy development formulation. Intervention-specific cost and cost-effectiveness data have been used to plan overall budgets, to assess the relative efficiency of different interventions and to consider the resource requirements for programme implementation at both the local and national levels. Cost and cost-effectiveness comparisons have been made between these studies and general sources such as the World Bank's World Development Report 1993. At the same time, information on key health sector variables, such as annual health expenditures, has been systematically compiled for more than two decades. The question of possible inflationary effects is becoming increasingly important as the original data on which these numbers are based ages. For example, cost figures from the mid-1980s require a 60% inflationary adjustment simply to maintain their real value in current dollars. This paper looks at methods to adjust cost data to account for inflation and discusses the difference between real or constant and nominal or current values. These methods are also used to make inflationary adjustments to other types of economic data such as income.

A critical review of 'a critical review': the methodology of the 1993 World Development Report, 'Investing in Health'.

Since its publication in 1993, the World Bank's World Development Report, Investing in Health, has been subjected to much criticism, particularly over the way it proposes to measure the health losses summarized in the concept of the 'burden of disease', and to establish priorities for health interventions according to the reduction in mortality and disability they could produce and what they would cost. Some of these criticisms are justified, and are recognized by the WDR; others arise from misunderstanding or misapplication of the concepts. Sifting these criticisms to arrive at a better understanding requires looking at what kind of analysis is involved, how the subjective elements of the exercise were determined, and how they can be used to choose which interventions deserve priority when a country cannot meet all its citizens' health needs.

The Dilemmas of Good Governance: A Latin American Perspective

DURING THE 1990S, THE INTERNATIONAL FINANCIAL INSTITUTIONS (IFIS) have gone beyond supporting free-market economics via the socalled Washington consensus which advocated primarily marketoriented reform, to adopt a broader notion of ‘good governance’ which includes political as well as economic factors. The World Bank's Development Report 1997; The State in a Changing World is a key document in explaining this new thinking. It lays out the desirability of democracy, the rule of law and effective democratic regulation alongside the market-oriented economic policies and fiscal orthodoxy which IFIs have long advocated. There is no doubt that governance matters to development and to that extent the Report is welcome. The Report also makes a number of worthwhile points about administrative good practice and reform. However some scepticism is in order too. This is because the Bank's notion of ‘good governance’ is too idealistic, insufficiently historically specific and over-confident in respect of what we do know and can know about the politics of development.

New constitutionalism, democratisation and global political economy*

Constitutional revision is a feature of the 1990s. Specifically, this involves initiatives to politically ‘lock in’ neo‐liberal reforms. These initiatives serve to secure investor freedoms and property rights for transnational enterprises. Yet students of international political economy have paid surprisingly little attention to the constitutional aspects of global restructuring. Thus this essay analyses the new constitutionalism of disciplinary neo‐liberalism, understood as the discourse of governance that informs this pattern of change. It is reflected in the World Bank's World Development Report 1997: The State in a Changing World. New constitutionalism operates to confer privileged rights of citizenship and representation to corporate capital and large investors. What is emerging within state forms (state & endash civil society complexes) is a pattern of authority in which capital has greater weight and representation, restraining the democratisation process that has involved centuries of struggle for representation—a development that is contested and contradictory.

A Concrete Response to Poverty?:Rethinking Approaches to Urban Poverty and Infrastructure: A Zambian Case Study

Summaries This article looks at definitions and concepts of urban poverty and the ways in which they inform the infrastructure debate. Parallels between the treatment of poverty in classical literature and the treatment of urban poverty in the current orthodoxy (notably as developed in the World Bank's World Development Report (WDR 1990)) are examined. This article suggests that this orthodox way of approaching and addressing poverty may not be producing either the most appropriate or sustainable response. The arguments are explored through an analysis of urban infrastructure provision with reference to an alternative approach to water services in urban Zambia.

African rural labour and the World Bank: An alternative perspective

In the context of economic and technological change in the late twentieth century, the World Bank's World Development Report 1995 combines the themes of labour and the global market, celebrating the triumph of the market in efficient labour-allocation worldwide. The World Bank's emphasis on boosting Africa's agricultural export capacity ignores the prevailing hostile conditions which African products encounter on the world market, and the current tendency towards agricultural labour displacement. `Labour flight', particularly of youth, signals African farmers' own disenchantment with farming under present liberalised market conditions. The narrowness of the W orld Bank's policy vision for Africa avoids the social and political implications of rural labour displacement as well as the need for human-capital investment in rural areas. This article argues that the alternative to human-capital investment now may be war and expensive disaster-relief for decades to come.

A healthy body and a healthy mind?: the relationship between ill-health and cognitive function in school-age children.

Health of school age children and the Partnership for Child DevelopmentUntil recently, health programmes in developing countries have focused on infant survival and on the health of adolescents and, consequently, the health concerns of children of school age, falling between the ages of infancy and adolescence, have been neglected. The World Bank Development Report of 1993, stated a need to move beyond the focus on survival and to capture the concept that community health depends on the quality of life and opportunities for development. In response, the Partnership for Child Development was set up in 1992 to address the problem of ill-health among school-age children in the developing world.

Health policy in less developed countries: past trends and future directions.

AbstractHealth policies worldwide have changed dramatically in the last few decades. We reflect upon these changes, highlight current trends and identity key issues and challenges as the year 2000 approaches. The article comprises five sections: (i) comments on concepts of health and of policy; (ii) historical developments which have influenced policy; (iii) discussion of the context within which health policies in low income countries are formulated and implemented, including macropolitical and macroeconomic developments, health needs and determinants, financing, approaches to health planning and priority setting, and the key international health policy actors; (iv) an overview of the content of current health policy proposals in less developed countries which considers the financing, organization and management of health systems and (v) a concluding section which identifies key issues for the coming years. The recent World Bank Development Report,Investing in Health(1993) and other health sector reform efforts, form the backdrop for this discussion.

A Review of Ppp-Adjusted GDP Estimation and its Potential Use for the Fund's Operational Purposes

International comparison of economic aggregates, expressed in domestic currencies, requires their conversion into a common numeraire currency such as the U.S. dollar or the SDR. Since market (or official) exchange rates are subject to fluctuations which may result in comparisons that do not reflect cross-country differences in real economic activity, it is often recommended that purchasing power parity (PPP) rates be used for conversion instead of exchange rates. It is generally agreed that PPP rates are conceptually appropriate conversion factors. However, their practical implementation raises questions regarding the quality of the PPP indices which are currently available. This paper reviews the data and methodology underlying the construction of PPP indices, with particular emphasis on the PPP-based estimates of GDP used in the Fund's World Economic Outlook and the World Bank's World Development Report, and examines some of the issues associated with the use of such PPP-based estimates of GDP for the Fund's operational purposes (such as quota calculations or determination of SAF or ESAF eligibility).

The ‘Mananga style’: An analysis of the educational ‘culture’ of the Mananga agricultural management centre

The development of agricultural managerial capabilities has been seen as a major cause of inefficiency and lack of growth in recent years. The World Bank Development Report 1982 11 surveying agriculture and economic development, particularly in Africa, noted that ‘management is often the key constraint’. The aim of this paper is to attempt to identify some of the factors that have contributed to a relatively successful off-the-job management development initiative. In particular, the paper examines some of the factors that have given rise to the statement by the Economic Development Institute 3 that the style of teaching at Mananga Agricultural Management Centre (MAMC) is effective. The focus of attention is upon the development of the educational ‘culture’ of MAMC. The paper explores some of the current themes in the literature on management and management development. This is related to the current practices at MAMC. The writer has taken the view that when evaluating an organization it is necessary to place emphasis upon the need to examine the ‘soft’ rather than ‘hard’ factors which are present in institutional development and management. The ‘soft’ factors were assumed to be—educational philosophy, organizational culture, organizational and personal values- whereas the ‘hard’ factors are described by the organizational analysts as—organizational structures, measuring, predicting and controlling mechanisms.

The World Bank's perspective on how to improve administration

AbstractThe editor assesses the World Bank's World Development Report 1983 in which the World Bank reviews how to improve administration and management. In particular he questions the assumptions underlying the case made in the report for the market as a versatile instrument of administration.