World Bank Development Research Articles

An analysis of IT software and service exports from India

PurposeThe aims of the paper are to investigate IT software and service export function for India. First, cointegration tests have been used to investigate the long-run equilibrium relationship of the given variables. Second, long-run coefficients and associated error correction mechanism are estimated.Design/methodology/approachAnnual time series data on IT software and service exports, human capital, exchange rate, investment in IT, external demand and openness index have been used for the present study during the period 1980–2017. The data are collected from the National Association of Software and Service Companies (NASSCOM), Planning Commission of India, University Grants Commission (UGC) of India, real effective exchange rate (REER) database and World Bank development indicators. Auto regressive distributed lag (ARDL) model is used to analyze both short-run and long-run dynamic behaviour of economic variables with appropriate asymptotic inferences.FindingsResults of the analysis show the stable long-run equilibrium relationship among the given variables. It is found that external demand, exchange rate, human capital and openness index have a substantial long-run impact on the IT software and service exports. We also found that the coefficient of error correction term is negative and significant at 1% of the level of significance, which confirms the existence of stable long-run relationship which means adjustment will take place when there is a short-run deviation to its long-run equilibrium after a shock.Research limitations/implicationsThere may be other determinants of software and service exports apart from those considered by the present study. Due to the non-availability of data, the study considers only important determinants that determine the software and service exports in India. The IT exports are an emerging and dynamic field of economic activity and the rate of change is so rapid that the relevance of individual factors may change over time. The study period is also limited to available data.Practical implicationsThe paper has implications for achieving sustainability in IT software and service exports growth. It is recommended that policies directed at improving the performance of IT software and service exports should largely consider the long-run behaviour of these variables.Originality/valueThis paper focuses on originality in the analysis of the relationship among the given variables including IT software and service exports, human capital, exchange rate, investment in IT, external demand and openness index in India. All the work has been done in original by the authors, and the work used has been acknowledged properly.

Emulate or differentiate?

Foreign aid relationships are valuable to donors as a means of improving development outcomes and influencing recipient country policy. The emergence of new donors can lead to competition as donors vie for influence over recipient government policy and attention. How does such competition affect the behavior of traditional donors? I draw attention to how the rise of China as a provider of development finance is changing the type of development that traditional donors support. Chinese development finance is particularly targeted at large infrastructure projects, and this focus can exert pressure on traditional donors. I suggest traditional donors can either emulate China’s approach to development, i.e. offer projects in infrastructure-intensive sectors, or differentiate themselves and specialize in alternative approaches to development, e.g. focus on governance and social sector interventions. I test this using data on the terms of World Bank and Chinese development finance in over 100 countries. I find the World Bank responds to competitive pressure from China by emulating the Chinese emphasis on infrastructure, allocating a greater share of its development projects in infrastructure-intensive sectors when recipient countries receive more Chinese development finance. Furthermore, subnational data shows that the World Bank also emulates China’s approach to development in response to competition at the regional level. China’s growing role as a provider of development finance affects traditional donor behavior, shaping the type of development donors support by introducing bottom-up competitive pressure.

Wishful thinking or wise policy? Theorising tourism-led inclusive growth: Supply chains and host communities

• Tourism contributes to employment overall, but precarious work conditions and low pay may limit opportunities for poverty alleviation. • The opportunities for tourism-led inclusive growth decrease as destinations are developed or redeveloped to maximise tourist growth and spend. • Economic linkages to local economies are weakened despite the clear potential for strengthening backward linkages in food and non-food sectors. • Low-income households and SME businesses are most affected by large-scale tourism projects with loss of land, business premises and livelihoods. • Privileging large capital, foreign firms and crony conglomerates is a regional trend and a major hurdle for tourism-led inclusive growth policy. Tourism is perceived as driving economic growth for developing countries by generating employment, income and government revenue. In debates over the relationship between economic growth and poverty alleviation, the inclusive growth paradigm emerged in World Bank, OECD and other development publications, becoming a UN Sustainable Development Goal (SDG 8). However, inclusive growth remains highly contested, and specifically, tourism’s role in economic growth has been little discussed. This paper contributes to the debate by interrogating tourism-led inclusive growth using evidence from developing economies in South-East Asia, a region with booming international tourism. It raises the fundamental question whether tourism-led growth can be inclusive in the short- to medium-term, drawing on evidence from fieldwork in Malaysia, Vietnam, Indonesia and Myanmar. Fieldwork utilised a rapid rural appraisal approach using qualitative methods, mainly semi-structured interviews. Although tourism can generate employment overall, this can be precarious and poorly paid, limiting opportunities for poverty alleviation. Tourism-led growth may widen inequalities in host communities and weaken backward linkages to the local economy, despite its potential for strengthening such linkages to food and non-food sectors. Remoteness and transportation also weaken such linkages. Low-income households and locally owned businesses are most affected by the construction of large-scale tourism projects – which although increasing overall tourist arrivals and expenditure - can result in the loss of land, business premises and livelihoods. In addition, privileging large capital, foreign firms and crony conglomerates is a regional trend and a major obstacle for tourism-led inclusive growth policy. Ownership patterns and destination governance also play critical roles in defining a destination’s direction/pace of development, steering it towards or away from tourism-led inclusive growth. Given tourism’s significance for many developing countries, the paper contributes to wider debates over inclusive growth both for theorising, and in its policy relevance for national development strategies and poverty alleviation.

Relationship Among Economic Growth, Energy Consumption, CO2 Emission, and Urbanization: Evidence From MINT Countries

This study aimed at examining the synergy among economic growth, carbon dioxide (CO2) emissions, urbanization, and energy consumption in MINT (Mexico, Indonesia, Nigeria, and Turkey) countries. Yearly data from 1993 to 2017, which were sourced from World Bank Development Indicators, were employed, and the analysis was performed by employing the ARDL Bounds test approach. The findings from the study reveal that the energy–growth hypothesis that assumed unidirectional causality from energy consumption was true for Nigeria and Indonesia, whereas Mexico and Turkey followed the feedback hypothesis, which indicates a bidirectional relationship. Meanwhile, all the MINT countries show a long-run relationship from economic growth, energy consumption, and CO2 emissions to urbanization. The study suggests that the policymakers in MINT countries should develop an energy conservation policy that will enhance the potential growth of their economy. More so, there is a need to promote green industries. Finally, to ensure sustainable urbanization in MINT countries, concerted efforts need to be made to ensure the reduction in the urbanization level, so as to ensure the sustainability of the urbanization, but without compromising the economic growth, through the formulation of policies that will ensure the decrease in CO2 emissions to achieve quality environment.

A Vector Error Correction Model Approach to Investigate the Causal Relationship among Energy Consumption, Real GDP, and Industry Value Added of Bangladesh

The paper focuses on investigating the casual relationship among Energy Consumption, Real GDP, and Industry Value Added of Bangladesh using the World Bank Development Indicators data set. The Granger causality approach has been applied to identify the short-run causality direction for all possible pairs of dynamic variables of the study. Results from the approach indicate the unidirectional short run causal relationship from Real GDP to Energy Consumption, while another unidirectional short-run causality has been found from Industry Value Added to Real GDP. The concept of cointegration and Vector Error Correction Model (VECM) are employed to find the long-run relationships among the variables. Our results show the existence of long run relationship between each pair of variables. Furthermore, the Variance Decomposition (VDC) techniques and Impulse Response Function (IRF) was also used to measure the extent/degree of dynamic properties of the variables. Bangladesh has an emerging economy with limited energy resources. Here, the evidence from our study would help policymakers in setting the appropriate energy consumption policies that will enhance and sustain economic growth for the welfare/development of this country.

The effects of health expenditure on infant mortality in sub-Saharan Africa: evidence from panel data analysis

IntroductionAlthough health expenditure in sub-Saharan African countries is the lowest compared with other regions in the world, most African countries have improved their budget allocations to health care over the past 15 years. The majority of health care sources in sub-Saharan Africa are private and largely involve out-of-pocket expenditure, which may prevent healthcare access. Access to healthcare is a known predictor of infant mortality. Therefore the objective of this study is to determine the impact of health care expenditure on infant mortality in sub-Saharan Africa.MethodsThe study used panel data from World Bank Development Indictors (WDI) from 2000 to 2015 covering 46 countries in sub-Saharan Africa. The random effects model was selected over the fixed effects model based on the Hausman test to assess the effect of health care expenditure on infant and neonatal mortality.ResultsBoth public and external health care spending showed a significant negative association with infant and neonatal mortality. However, private health expenditure was not significantly associated with either infant or neonatal mortality. In this study, private expenditure includes funds from households, corporations and non-profit organizations. Public expenditure include domestic revenue as internal transfers and grants, transfers, subsidies to voluntary health insurance beneficiaries, non-profit institutions serving households or enterprise financing schemes as well as compulsory prepayment and social health insurance contributions. External health expenditure is composed of direct foreign transfers and foreign transfers distributed by government encompassing all financial inflows into the national health system from outside the country.ConclusionHealth care expenditure remains a crucial component of reducing infant and neonatal mortality in sub-Saharan African countries. In the region, where health infrastructure is largely underdeveloped, increasing health expenditure will contribute to progress towards reducing infant and neonatal mortality during the Sustainable Development Goals (SDGs) era. Therefore, governments in the region need to increase amounts allocated to health care service delivery in order to reduce infant mortality.

The State of Maternal and Infant Health and Mortality in Chad.

The level of Chad's government expenditure on health is a predictor of the general health of the population and, consequently, life expectancy. We used data from the World Bank's World Development Indicators and publications from the World Health Organization to assess the state of maternal and infant health and mortality. The primary objective of this research was to investigate whether Chad had reduced the risk of maternal and infant mortality after signing the Abuja Declaration in 2001. We hypothesised that increased general government health expenditure was associated with improved health mediated by increased numbers of skill health workers and minimum out-of-pocket health expenditure. Our secondary objective was to assess effective implementations of health policies in line with the Millennium Development Goals that Chad has agreed to achieve by 2015. We observed that, as of 2015, the government health expenditure was only 6.28% and the population out-of-pocket spending was over 56%. Furthermore, only 20% of women give birth in a hospital. These results led to three major policies recommendations in order to improve maternal and infant health in Chad: skilled birth attendants training, enhanced social status of nurses, and the development of a supplemental nutrition care program for women.

The monetary policy and price stability nexus: The Nigerian case (1981-2016)

The study evaluated the effects of monetary policy on price stability in Nigeria for the period 1981-2016. The consumer price index was used as the dependent variable while money supply, interest rate, exchange rate, Gross Domestic Product (GDP) and treasury bill rates were the independent variables. The research made use of secondary data obtained from Central Bank of Nigeria Statistical Bulletin and World Bank Development Indicators. The study employed Auto Regressive Distributive Lag (ARDL). The unit root test showed that all the time series data were not stationary series. The result showed in the short-run and long-run, exchange rate, money supply, GDP and open market operations have significant effects on price stability in Nigeria while interest rate is significant only in the short-run. Based on the findings, the study recommended among others, that Central Bank of Nigeria increase interest rates during inflation in order to control money supply and consequently inflation. Government should take policy actions swiftly so as to reduce lag problems. Also, monetary policy alone cannot be used to maintain price stability. It should, therefore, be supplemented by fiscal measures, non-monetary and non-fiscal measures.

Sectors’ Export and Economic Growth in Ethiopia: (VECM Causality Approach)

The link between export and economic growth has been interesting and rich source of debates among economists and many other scholars. Particularly looking depth into the logical disagreement of the scholars; it is revolves mainly around whether export-led growth hypothesis or growth-led export hypothesis hold true in the explicit circumstances for different countries. And this divergence is also the foremost purpose of this work in that the causal relationship between sectors’ export and output growth in Ethiopia examined using secondary time series data collected from national bank of Ethiopia, ministry of finance and economic development and World Bank development indicator data base. VECM model used and its result reveal, in the long run the existence of unidirectional causality which run from economic growth to agriculture, industry and service export disjointedly however in the short run it reveal the existence of unidirectional causality which runs solely from economic growth to service export, in other word growth-led export hypothesis supported in case of Ethiopia. Therefore, to further develop and diversify export in Ethiopia, economic growth needs to be strengthening and diversified. Keywords : export, economic growth, econometrics, VECM model and causality. DOI: 10.7176/JESD/11-3-04 Publication date: February 29 th 2020

Financial inclusion in Africa: does it promote entrepreneurship?

PurposeFinancial inclusion policy focuses on bringing the less privileged groups into the formal financial system. Financial inclusion has a lot of benefits in the society. It can reduce the level of poverty, inequality and encourage business startup. This study aims to examine the impact of financial inclusion on entrepreneurship in selected African countries.Design/methodology/approachThis paper examines how financial inclusion impacts entrepreneurship in 13 selected African countries using data from World Bank Development Indicators, IMF’s International Financial Statistics, doing business and World Bank Entrepreneurship Survey for the period of 2005-2016. It uses panel data regression techniques such as random effect, IV estimation and robust least square.FindingsThe results show that financial inclusion has a significant and positive effect on entrepreneurship in Africa. This result is robust to both alternative measures of financial inclusion and alternative estimators.Originality/valueThe possible relationship between financial inclusion and entrepreneurial development has been an ongoing debate in other developing countries. However, this issue has been neglected in the African region. There are little or no evidence to support the possible relationship in Africa. This paper makes an important contribution in this respect and further provides insightful information in the ongoing debate.

Impact of Out-of-Pocket Expenses for Surgical Care on Households in Rural Haiti: A Mixed-Methods Study

Introduction: Affordability is a key component of essential surgical care. In Haiti, a low-income country, patients can incur substantial costs when seeking surgical care. These have not previously been described. The present study aims to report costs to patients to access surgery and the lived experience of patients and families seeking care at St. Boniface Hospital (SBH) in southern Haiti. Methods: We conducted an explanatory, sequential mixed methods study among 159 patients at SBH who received surgical care between July-August 2017. We recorded patients’ socio-demographic and economic characteristics and their surgical interventions. Using the World Health Organization (WHO) and World Bank definitions for catastrophic health expenditure, we estimated the proportion of patient households that experienced catastrophic expenditure through direct, indirect, and total household expenditures. We then conducted semi-structured interviews with 18 patients and used narrative analysis and grounded theory to synthesize this interview data into key ideas and themes. Results: The median total household expenditure on surgery-related expenses in the month prior to the interview was USD 385∙6, slightly more than half of per capita gross domestic product in Haiti (USD 729∙3). Patients commonly paid for surgical costs through loans and donations (69∙8%). Using the World Health Definition, direct and indirect expenditures were catastrophic in 76∙7% of households. Using the World Bank Development Indicator, 86% of households experienced catastrophic health expenditure. Qualitative results revealed prominent themes in barriers to care including the burden of care-seeking, care-seeking journeys, and social suffering. Discussion and Conclusion: Catastrophic health expenditure rates for patients seeking surgical care at in rural Haiti are significant. Opportunities for improvement include broadening the range of surgical services at each facility, collaborating with local surgical providers to reduce cost, and increasing national access to health insurance and subsidies to account for the indirect payments. Funding Statement: This project received funding support from Harvard Medical School. Declaration of Interests: MP, RP, AB, EO, AK, CM, and CL have nothing to disclose. BA reports grants from Mercy Ships to perform outcomes research, outside the submitted work. Ethics Approval Statement: This study received ethical approval from the Institutional Review Board (IRB) of the Harvard Medical School Office of Human Research Administration and the Research and Ethics Committee at St. Boniface Hospital. All participants provided verbal informed consent.

Causal Relationships GDP per Capita, Human Development Index and Corruption Perceptions Index in Indonesia

The purpose of this study is to explain the causal relationship of GDP per capita, CPI and HDI Indonesia which is broken down into three hypotheses. The research variables were collected from the World Bank, Transparency International and United Nations Development Program documentation from 1995 to 2018. Results of the study: first, based on unit root test on each variable using Augmented Dickey-Fuller (ADF) at the 1st level difference in value absolute statistic t is greater than critical value according to MacKinnon table. Similarly, the Prob value is smaller than 0.05, therefore, the research variable data are stationary. Second, the granger causality test is by comparing the probability values of each hypothesis with a 5% error rate. Based on the data analysis not a single hypothesis was tested, however, it is found that the one-way relationship is that HDI drives GDP per Capita with a probability of 0.0161 <0.05 using lag length 4.

COVID-19: THE ECONOMIC OUTLOOK, IMPACT, AUTHORITIES AND LONG TERM STRATEGIES OF NEPAL

The paper introduces a coronavirus pandemic impact on the economy from a variety of dimensions such as economic outlook, growth shock, recession curve analysis, the role of regulators and proposed long term strategies. This paper also analyzes the impact of the coronavirus pandemic on the growth of the economy. The study observed about the consequences of the pandemic with the help of three shaped of curve called U, L and V. Also, this study used the secondary published data from International financial institutions such as World Bank and Asian Development Bank as to describe the current growth and also predict the pre-COVID economic growth of Nepal.

Financial access indicators of financial inclusion: a comparative analysis of SAARC countries

Financial inclusion provides access to formal financial services at reasonable cost to the financially excluded people. Financial inclusion has been one of the most sought after topics in recent times for policy makers, researchers and academicians. Definition of financial inclusion varies from region to region. Financial inclusion is measured using different indicator. The important indicators of financial inclusion measurement include access indicators, usage indicators, quality indicators and financial education indicators. Most of the researchers use access indicators and usage indicators to measure financial inclusion. Access indicators comprise of demographic and geographic branch penetration, demographic and geographic ATM penetration and population per branch. This study focuses on comparative analysis of access indicators of financial inclusion in SAARC countries. The study is based on secondary data available in the central banks of SAARC nations, International Monetary Fund, World Bank and Asian Development Bank. The study has found and analysed about the countries which has performed well in each indicator of financial access.

The Impact of Budget Deficit on Economic Growth in an Emerging Market: An Application of the ARDL Technique

The motive of this thesis is to empirically examine the influence of the budget deficit on Nigeria’s growth. This research is based on data from the Central Bank, World Bank and World Development Indicators of Nigeria from 1981 to 2016. To the best of my understanding, there has been no previous study to examine these relationships with all these indicators listed in Nigeria. This study, therefore, proposes to close this literature gap. The main findings are that, in the long term, The ARDL bounds test result reveals that there is a cointegrating relationship between variables. Furthermore, the study revealed that in the long run, gross domestic savings, interest rate, and budget deficit have significant relationship with economic growth while in the short run an only budget deficit and gross domestic savings have a positive influence on economic growth. Various diagnostic tests were carried out to determine whether the model is good. The study concludes that budget deficit has a significant impact on economic growth of Nigeria. Thus, the Keynesian theory is true for Nigeria. Finally, the study recommends that since higher gross domestic savings will lead to an increase in gross domestic investment thereby increasing economic growth. Therefore, there is a need to increase the interest rate to encourage savings in order to accumulate enough resources for investments. Therefore, in the long run, the nation’s productivity level will increase.

Financial access indicators of financial inclusion: a comparative analysis of SAARC countries

Financial inclusion provides access to formal financial services at reasonable cost to the financially excluded people. Financial inclusion has been one of the most sought after topics in recent times for policy makers, researchers and academicians. Definition of financial inclusion varies from region to region. Financial inclusion is measured using different indicator. The important indicators of financial inclusion measurement include access indicators, usage indicators, quality indicators and financial education indicators. Most of the researchers use access indicators and usage indicators to measure financial inclusion. Access indicators comprise of demographic and geographic branch penetration, demographic and geographic ATM penetration and population per branch. This study focuses on comparative analysis of access indicators of financial inclusion in SAARC countries. The study is based on secondary data available in the central banks of SAARC nations, International Monetary Fund, World Bank and Asian Development Bank. The study has found and analysed about the countries which has performed well in each indicator of financial access.

Analysis of Causal Nexus between Defense Spending and Economic Growth in Nigeria: A Toda-Yamamoto Approach

The research analysed the causal nexus between defense spending and growth in Nigeria. These were done with the aim to ascertain the causality direction between spending in defense sector and growth in Nigeria. Annual data from secondary sources spanning from 1980- 2017 were employed for the study. Defense spending data was gotten from the Statistical Bulletin of the Central Bank of Nigeria (CBN), whereas real Gross Domestic Product (RGDP) was gotten from World Bank Development Indicator (WDI). Toda-Yamamoto (TY) causality method was used to ascertain the causality direction between defense spending and economic growth. Lastly, empirical results using Toda-Yamamoto (TY) technique showed that there was no direction of causality between defense spending and economic growth within the research period since the probability value of LTOMILEX (0.38) and LRGDP (0.22) were higher than 0.05 level of significance. This denotes that defense spending did not granger cause economic growth and vis-a-ditto within the study. Therefore, the paper concluded that no direction of causality exist between defense spending and economic growth in Nigeria within the span of study.

Causal Relationship between Industrial Action and Economic Growth in Nigeria

The paper examines the direction of causality between industrial action and economic growth in Nigeria over the period 1986-2018 using endogenous growth model. This was with the view to determining whether or not man- day-lost to industrial crisis in the country through high numbers of industrial action Granger caused economic growth in Nigeria. Annual time series data such as man-day-lost, Gross Domestic Product, Consumer Price Index, Labour Force Participation and Gross Capital Formation were source from Central Bank of Nigeria Statistical Bulletin, National Bureau of Statistics Annual Reports and World Bank Development Indicators. Data were analysed using co-integration and Vector Error Correction Model Granger causality techniques. Results reveal that there exists long-run relationship between industrial action and economic growth in Nigeria. The causality test revealed unidirectional causality running from economic growth to industrial action, while it finds no empirical support for the reverse causation. This implies that whenever economy is growing, citizen may agitate for higher wage increment and thereby leads to higher industrial action in the country. The study concluded that, there exist long-run causal relationship between industrial action and economic growth in Nigeria.

The Study on the Impact of Liberia’s Exports and Imports on Its Economic Growth

Liberia is labeled at the peak considered as one of the poorest countries in the world. Therefore, Liberia needs to take an effective trade policy approach to promote both domestic and international trade facilitation if it is to achieve sustainable and further economic growth. International trade is the engine for economic development, and it has become one of many economic discussions not only among West African States and member countries but globally that Liberia is no exception to since exports-trade leads to GDP growth and economic development. As a result of frequent trade deficits and Liberia’s economic reliance on extractive commodities for trade in agricultural goods, the study sought to analyze the role of exports-trade on economic growth and development with regard to Liberia. The study was conducted using secondary data generated from the World Bank Development Indicators (WBDI) for the period 2000-2019. The study employed a time series regression model of the Ordinary Least Squares (OLS) and technique by Stock and Wilson (1988) to analyze Liberia’s trade performance using macroeconomic indicators/variables that have an effect on economic growth, such as, Exports, Foreign Direct Investment (FDI), Population growth, Imports, Gross Fixed Capital Formation, (GFCF) and Gross Domestic Product (GDP) as the key indicators of analysis. The regression results obtained from the study on the Ordinary Least Squares tests show a linear association and a straight-line relationship among the variables, namely: export, foreign direct investment, population and economic growth in Liberia. With the estimated results, import has a negative impact and relationship with Liberia’s GDP growth. The effect of export was positive and highly statistically significant.

Economic Policy Uncertainty and Firm Performance in the Czech Republic

The business environment undergoes a number of changes due to the decisions made by the government and politicians of a particular country and this impacts the performance of the firms that operate in that business environment. In other words, the uncertainty in decisions of the government and politicians and the policies made by them impact the financial decisions of the firms. In this regard, the current study has been conducted to discover and examine the affect casted by EPU on the performance of the company within Czech Republic. Financial data has been collected from the public non-financial companies of Czech Republic. The data has been collected for the time of 29 years. The data gathered against the most reliable databases such as World Bank Development Indicators and Global Economy about the required variables. The GMM estimation technique was applied on the collected data and the results were obtained. The results obtained indicate that unreliability has significant as well as bad effect on the performance of the company and in opposite way; the interest rate has significant along with positive impact on firm’s performance. But the inflation rate’s impact is notable and rare only in case of net profit margin proxy of the performance of the company. Practical implication of the knowledge is for non-financial firms of Czech Republic and it might assist them in designing policies and regulations regarding the precautionary measures which can be taken in case of EPU so that the financial performance of the firms is not disturbed.