World Bank Development Research Articles

AIIB Business Strategy Decisions: What It Can Do Differently to Make a Difference

The Asian Infrastructure Investment Bank (AIIB) must break from World Bank and Asian Development Bank (ADB) practices to close Asia’s $8.3 trillion infrastructure gap during 2016-2020. Otherwise, AIIB’s stand-alone 2020 investment capacity, projected at $250 billion, will fall far short of the needs. AIIB should invest innovatively to develop infrastructure finance as an asset class and quickly organize concessional financing. AIIB should focus on mobilizing new money from institutional investors by mitigating risks and facilitating the pricing of illiquid long-term infrastructure assets. In particular, AIIB should split its investments between new projects and purchases of existing infrastructure financing, including bank loans (switched then into bonds) and equity to establish Asian infrastructure bond and equity funds. AIIB’s direct investments in new infrastructure projects should emphasize equity, subordinated debt, and guarantees rather than senior debt. AIIB could catalyze new money by addressing legal/regulatory/tax issues and providing political comfort. In addition, AIIB should quickly organize concessional financing and consider easing graduation thresholds based on GDP per capita to avoid too-early member exits from concessional finance.

Financial Integration, Exchange Rate Stability and Macroeconomic Variables in Nigeria: “A Structural Impact”

This paper explores the structural impact of financial integration and exchange rate stability on macroeconomic variables (inflation, economic growth, inflation volatility, and growth volatility) in Nigeria from 1980 to 2012, using a structural model. The study employs the use of Vector Error Correction Model (Coefficient Diagnostic Wald Test, and Impulse Response Function of VECM) to achieve our objectives. Time series data was collected from World Bank Development Indicators, Central Bank of Nigeria bulletin (2012) and Azienman, Chinn and Ito (2013). Results indicates that exchange rate stability has no significant impact on inflation rate in the short run, while percentage increase in financial integration has a significant reduction impact on the rate of inflation in lag1&2 by 126% and 79% respectively. Again a percentage increase in exchange rate stability significantly increased economic growth in lag 1 &2 by 30% and 50% respectively, while financial integration together with the financial institution depth (money supply/GDP) and financial market depth (stock market capitalization/GDP) have no significant impact on economic growth. Furthermore, there is no significant impact of the financial integration and exchange rate stability on inflation and growth volatility in the short-run. Exchange rate stability transmitted positive shocks to economic growth and inflation volatility and negative shocks to inflation rate and growth volatility. The impulse response of inflation and economic growth to a unit shock from financial integration fluctuated for the periods, while shocks from financial integration emitted negative impulse on inflation and growth volatility. In addition, impulse response of exchange rate stability and financial integration to unit shock from inflation, growth volatility and financial sector development (stock market capitalization/GDP, money supply/GDP) remained negative. The results imply that the combination of financial integration and exchange rate stability policy is a viable instrument towards achieving a stable economy. Therefore, this paper suggests that government should pay closer attention towards policies that will ensure stability in socio-economic and political environment, if Nigeria will achieve greater benefits in exchange rate stability and more financial integration.

Technological Environment and Technology Entrepreneurship: A Cross‐Country Analysis

Recent years have seen growing interest in the influence of the environment on entrepreneurship. However, little is known about the impact of the country‐level technological environment on the creation of new technology‐based firms. This study investigates the relationship between the technological environment (measured by the amount of investment in R&D, and access to information and communication technology [ICT] infrastructure) and technology entrepreneurship, in 54 countries during the years 2005 to 2010. Using data from the Global Entrepreneurship Monitor, and the World Bank Development Indicators, we identify a significant, robust inverted U‐shaped relationship between R&D investment at country level and the likelihood of technology entrepreneurship. We also find evidence of a positive relationship between access to ICT infrastructure and the likelihood of technology entrepreneurship.

Sudan's Unsustainable Debt: The Way Out!

The aim of this paper is to identify the main factors behind Sudan's huge external debt, as well as to identify its impact on the country's major economic indicators (especially Foreign Direct Investment (FDI), Per capita income, and poverty). Moreover, the paper will examine the strategies adopted by the government in order to reduce its unsustainable debt including benefiting from the available international initiatives such as Heavily Indebted Poor Countries (HIPCs); besides proposing a way out for the relief of the country unsustainable external debt. The methodology adopted in this paper is descriptive and analytical in nature depending mainly on secondary sources of data. The study indicated that Sudan’s debt is unsustainable and the country is highly indebted. Subsequently, statistics by International Monetary Fund (IMF) showed that the present value of Sudan’s total external debt, as of December 2012, stood at $ 79 billion, which was equivalent to 150% of GDP, 1,697% of exports and 1,646% of revenues. These ratios are far beyond the threshold of debt sustainability for Less Developing Countries. Although, the country is qualified technically to benefit from the HIPCs initiatives, but the Sudan has been banned from entering into the initiative, partly because the country needs to settle its arrears to the major creditors, i.e., IMF, World Bank (WB), and African Development Bank (AFDB), Paris and Non-Paris Club Creditors, and partly due to political demands imposed by the international community (in general and US in particular) to solve the Darfur problem.

Opportunities and challenges for multiple-embeddedness through mergers and acquisitions in emerging economies

Purpose – The purpose of this paper is to examine opportunities and challenges from multiple-embeddedness of developed countries multinational enterprises (DMNEs) in emerging economies. It further investigates the effect of global financial crisis on the DMNE’s embeddedness strategies. Design/methodology/approach – Utilising POLS regression on secondary data bases, such as World Bank Development Indicators, over two period, first, from 2003 to 2007 (pre global financial crisis period), and second, from 2008 to 2012 (post global financial crisis), this study models the advantages and challenges faced by DMNEs into emerging markets. Findings – Findings suggest that challenges in terms of institutional and cultural differences have decreased over time. This may be due to the DMNE’s experience of operating in emerging economies. Research limitations/implications – Since the global financial crisis is on-going, further changes in terms of opportunities and challenges are yet to be uncovered. Further investigations using qualitative designs are also warranted because many qualitative phenomena, such as cultural differences, cannot be captured through purely quantitative methods. Practical implications – There are two practical implications. First, policy makers can appreciate the change in the economic gravity in the current scenario. Openness of economies may further bring in economic equilibrium in favour of emerging economies. Second, managers of businesses looking to internationalise should pay attention towards changing market conditions and requirements in emerging economies. Social implications – This paper portrays the importance emerging economies which consist of a large proportion of the world’s population. Originality/value – In the current economic scenario, this paper seeks to highlight the opportunities and challenges for multiple embeddedness through mergers and acquisitions in emerging economies, which is seen to be timely and topical and at the same time advances the theoretical knowledge and practical implications.

Use of standardised patients to assess quality of tuberculosis care: a pilot, cross-sectional study

Existing studies of the quality of tuberculosis care have relied on recall-based patient surveys, questionnaire surveys of knowledge, and prescription or medical record analysis, and the results mostly show the health-care provider's knowledge rather than actual practice. No study has used standardised patients to assess clinical practice. Therefore we aimed to assess quality of care for tuberculosis using such patients. We did a pilot, cross-sectional validation study of a convenience sample of consenting private health-care providers in low-income and middle-income areas of Delhi, India. We recruited standardised patients in apparently good health from the local community to present four cases (two of presumed tuberculosis and one each of confirmed tuberculosis and suspected multidrug-resistant tuberculosis) to a randomly allocated health-care provider. The key objective was to validate the standardised-patient method using three criteria: negligible risk and ability to avoid adverse events for providers and standardised patients, low detection rates of standardised patients by providers, and data accuracy across standardised patients and audio verification of standardised-patient recall. We also used medical vignettes to assess providers' knowledge of presumed tuberculosis. Correct case management was benchmarked using Standards for Tuberculosis Care in India (STCI). Between Feb 2, and March 28, 2014, we recruited and trained 17 standardised patients who had 250 interactions with 100 health-care providers, 29 of whom were qualified in allopathic medicine (ie, they had a Bachelor of Medicine & Surgery [MBBS] degree), 40 of whom practised alternative medicine, and 31 of whom were informal health-care providers with few or no qualifications. The interactions took place between April 1, and April 23, 2014. The proportion of detected standardised patients was low (11 [5%] detected out of 232 interactions among providers who completed the follow-up survey), and standardised patients' recall correlated highly with audio recordings (r=0·63 [95% CI 0·53-0·79]), with no safety concerns reported. The mean consultation length was 6 min (95% CI 5·5-6·6) with a mean of 6·18 (5·72-6·64) questions or examinations completed, representing 35% (33-38) of essential checklist items. Across all cases, only 52 (21% [16-26]) of 250 were correctly managed. Correct management was higher among MBBS-qualified doctors than other types of health-care provider (adjusted odds ratio 2·41 [95% CI 1·17-4·93]; p=0·0166). Of the 69 providers who completed the vignette, knowledge in the vignettes was more consistent with STCI than their actual clinical practice-eg, 50 (73%) ordered a chest radiograph or sputum test during the vignette compared with seven (10%) during the standardised-patient interaction; OR 0·04 (95% CI 0·02-0·11); p<0·0001. Standardised patients can be successfully implemented to assess tuberculosis care. Our data suggest a big gap between private provider knowledge and practice. Additional work is needed to substantiate our pilot data, understand the know-do gap in provider behaviour, and to identify the best approach to measure and improve the quality of tuberculosis care in India. Grand Challenges Canada, the Bill & Melinda Gates Foundation, Knowledge for Change Program, and the World Bank Development Research Group.

Export and Economic Growth in Select South Asian Countries: Causality Analysis Based on Granger Test &amp; VECM

Over the past thirty years, many developing countries have adopted export promotion as their development policy. The export-led growth approach encouraged countries to focus on production for exports. After the miraculous performance of the East and South East Asian countries, the South Asian countries also shifted their strategy in favour of export oriented policies. The present study analyzed the export-led growth hypothesis in select South Asian countries namely Bangladesh, India, Pakistan, and Sri Lanka by using unit root, cointegration, vector error correction model, and Granger causality test. Time series data for exports and imports of goods&services and gross domestic product (GDP) per capita were taken for the period from 1980-2012 from The World Bank's world development indicators. The study concluded that export-led growth hypothesis was valid for Bangladesh and Sri Lanka only in the long run. For India, the study found evidence of export-led growth hypothesis, particularly for the short run. No short run and long run relationship was found for Pakistan. The VECM results for imports and GDP per capita showed that imports significantly caused GDP per capita only in Bangladesh, but no long run causal relationship was found from GDP per capita to imports. The results of the Granger causality test do not show any causal relationship between imports and GDP per capita except for Pakistan, in case of which there is unidirectional causality from GDP per capita to imports.

Kuznets’ swings and intangible investments in forecast: the case of Greece

This article offers an analysis of the relationship between intangible investments and the pattern of local economic productivity in Greece. There are two main objectives in the article: (i) to explore the pattern of economic development in the country; (ii) to find evidence whether this pattern – and its trend – can be better predicted through a forecasting model including intangible investments (next to other relevant factors). To operationalize our study, we use the World Bank Development Indicators database which offers a time-series for Greece for the period from 1981 till date. This data set has two alternative relevant measures for intangible investments: knowledge- and health-related investments. In our analysis we employ first, a centred moving average with a stochastic estimation of the trend, and second a double exponential smoothing, as two alternative (‘deductive’ and next ‘inductive’) approaches to identifying a trend in our data for Greece. We find evidence for a Kuznets swing type of cyclical pattern for Greece – confirmed by triangulation. Most significantly, we also find a relationship between local economic development and intangible investments. These results prompt an evidence-based query about underlying Myrdalian and Tieboutian foundations of wave theory for understanding local economic crises.

Fighting AIDS in Africa: A Principal-Agent Analysis

The use of a lottery by the World Bank Development Research Group to incentivize safer sexual behavior as a part of an AIDS prevention strategy in Lesotho provides an example of a novel yet real-world application of a textbook principal-agent model where the agent is risk-preferring instead of the more usual risk averse. Consideration of the model leads to the conclusion that research to understand the incentives to which risk-preferring agents respond is long overdue.

Does Human Development Influence Women’s Labour Force Participation Rate? Evidences from the Fiji Islands

Existing studies on human development and women’s labour force participation rate shows mixed results. Some studies have found that human development influences women’s labour force participation rate while other studies have found that there is no relationship between human development and women’s labour force participation rate. This paper uses data from the United Nations Development Programme, World Bank and Asian Development Bank database to empirically determine whether human development influences women’s labour force participation rate in Fiji. The findings of this study confirm that human development influences women’s labour force participation rate both in the short run and long run. Currently, the most immediate need in Fiji is to review existing education policies that are targeted towards different gender and minority groups so that these policies can effectively contribute towards developing an egalitarian society.

Cross-national variations in the scale of informal employment

Purpose– The purpose of this paper is to evaluate critically the competing explanations for the cross-national variations in the scale of informal employment which variously correlate higher levels of informal employment with economic under-development (“modernization” theory), corruption, higher taxes and state interference (“neo-liberal” theory) and inadequate state intervention to protect workers from poverty (“structuralist” theory).Design/methodology/approach– To do this, data on the prevalence of informal employment collected by the International Labour Organisation using a common survey method across 41 less developed economies are analysed and compared using bivariate regressions with World Bank development indicators.Findings– Some 34.4 per cent of the non-agricultural workforce is in informal employment across these 41 countries, with the share in informal employment ranging from 83.6 per cent in India to 6.1 per cent in Serbia. Evaluating critically the competing explanations, a call is made for a synthesis of the modernisation and structuralist theoretical perspectives in a new “neo-modernisation” theory that tentatively associates higher levels of informal employment with economic under-development, smaller government and inadequate state intervention to protect workers from poverty.Research limitations/implications– Based on 41 cases, a multivariate regression analysis was not possible to determine how important each characteristic is to the final outcome whilst controlling for the other characteristics.Practical implications– This paper tentatively displays that wider economic and social policies, such as social protection, are significantly correlated with the level of informal employment.Originality/value– This is the first paper to use a direct survey to analyse and explain cross-national variations in informal employment in less developed economies.

Avoidable maternal and neonatal deaths associated with improving access to caesarean delivery in countries with low caesarean delivery rates: an ecological modelling analysis

BackgroundReducing maternal and neonatal deaths are important global health priorities. We have previously shown that up to a country-level caesarean delivery rate (CDRs) of roughly 19·0%, cesarean delivery rates and maternal mortality ratio (MMR) and neonatal mortality rate (NMR) were inversely correlated. We investigated the absolute reductions in maternal and neonatal deaths if countries with low CDR increased their rates to a range of greater than 7·2% but less than or equal to 19·1%. MethodsWe calculated maternal and neonatal deaths in 2013 and 2012, respectively, for countries with CDR 7·2% or less (N=45) with available data from the World Bank Development Indicators. We modelled the expected reduction in deaths in these countries if they had the 25th and 75th MMR and NMR percentiles observed for countries (N=48) with CDRs ranging from greater than 7·2% but less than or equal to 19·1%. This model assumes that if countries with low CDRs increased their rates of caesarean delivery to greater than 7·2% but less than or equal to 19·1%, they would achieve levels of MMR and NMR observed in countries with those CDRs. FindingsWe estimate 176 078 (95% CI 163 258–188 898) maternal and 1 117 257 (95% CI 1 033 611–1 200 902) neonatal deaths occurred in 45 countries with low CDRs in 2013 and 2012, respectively. If these countries had the 25th and 75th MMR and NMR percentiles (MMR, IQR 36–190; NMR, 9–24) observed in countries (N=48) with a CDR ranging from greater than 7·2% but less than or equal to 19·1%, there would be a potential reduction of 109 762–163 513 and 279 584–803 129 maternal and neonatal deaths, respectively. InterpretationIncreasing caesarean delivery in countries with low CDRs could avert as many as 163 513 maternal deaths and 803 129 neonatal deaths annually. These findings assume that as health systems develop the capacity to deliver surgical care, there is a concurrent improvement in the quality of care and in the ability to rescue women and neonates who would otherwise die. Improving access to safe caesarean delivery should be a central focus in surgical care globally. FundingNone.

Publishing for pre-tertiary education in Ghana: the 2002 textbook policy in retrospect

This paper assesses the performance of the “National Textbook Development and Distribution Policy for Pre-Tertiary Education” of 2002. It examines the policy in theory and in practice by exploring the extent to which the liberalisation of the textbook trade has helped to improve on textbook procurement, production and distribution, availability, quality and access to the books. The paper discusses the context leading to the transition from the state-controlled policies to the present liberalised textbook provision policies in Africa. The tensions that marked the transition period and the role of the World Bank and other development agencies in the policy shift have also been discussed. The paper identifies a number of implementation challenges stalling the full realisation of the objectives of the textbook policy including the Ministry of Education’s interference in the textbook procurement process and some publishers’ and authors’ abuse of the conflict of interest regulation in the policy. The paper makes a number of recommendations for consideration.

Roadmap for Regional Integration within the Central African Economic and Monetary Community (CEMAC) under the NEPAD Framework

The Central African Economic and Monetary Community, more frequently and generally referred to as the CEMAC, from its French acronym; Communaute Economique et Monetaire des Etats de l’Afrique Centrale, has been striving for many years to institute fully functional and mutually beneficial economic reforms that should facilitate trade and other forms of economic cooperation among member states. This has been the structure’s main focus from inception as its principal objectives at creation in 1999. In sum, it has been to converge with the goal of monitoring and controlling national economic policies, coordinating sectoral reforms, and to progressively create a common market. The challenges that prevent the community from marginally or significantly achieving any of the above objectives of the community are diverse. The Member countries jointly have a population of about 40 million inhabitants who use a common currency, and have built a number of institutions in a bid to foster regional integration but there seem to be a number of political, economic, socio-cultural, administrative factors, and more dynamics that inhibit genuine cooperation to the detriment of a progressive itinerary to a common market. Identifying these inhibitive factors through the scrutiny of documented policies, the collection of data from local and multinational businesses in the sub region, consulting World Bank, IMF, and African Development Bank reports, perusing scholarly publications, and observing stake dynamics to suggest a way forward, is the intent of this research. This paper seeks to demonstrate that abandoning the integration efforts does not constitute an option for the reason that there are diverse chances for improvement as the way forward. The first part of the paper shows a glimpse of the current CEMAC economic and political situation, with the need for an effective integration. The paper demonstrates in its second part the role that the New Partnership for Africa’s Development (NEPAD) can play in assisting the CEMAC region in achieving its objectives, and the last part makes recommendations for a roadmap for an effective integration within the central Regional Economic Community.

FISCAL SPACE FOR HEALTH IN SUB-SAHARAN AFRICAN COUNTRIES: AN EFFICIENCY APPROACH

The study argues that potential savings from efficiency could be effective alternative to increasing health system financing in SSA. Health system efficiency estimates were derived from the Data Envelopment Analysis and Stochastic Frontier Analysis and used to compute potential gains from efficiency. Data was sourced from the World Bank's world development indicators for 45 SSA countries in 2011. The results reveal that average potential saving in health expenditure from improved efficiency was 0.10% and 0.75% of GDP per capita in the DEA and SFA models, respectively. The results also showed that a 1% increase in efficiency of health expenditure reduced infant mortality rate by 0.91% compared to 0.40% reduction in infant mortality if health expenditure increased by 1%. The results imply that in the face of significant economic challenges and burden on government budget, improving health expenditure efficiency to create some fiscal space will be an important step.

Assessing Energy Efficiency of Port Operations in China—A Case Study on Sustainable Development of Green Ports

Recent joint report by World Bank Group and development research center of the State Council of China pointed out the importance of sustainable development of infrastructure in China. However, the most recent report by Natural Research Defense Council (Oct 0214) indicated that only a few port cities in China paid attention to the air pollution from ship and port activities. This study reports the finding of assessing energy efficiency of port operations in China based on the data from public domains by using the combination of Data Envelopment Analysis (DEA) and Panel Data Estimation (PDE). This study also exams the gap between the proposed green port evaluation index and actual guideline of port operations by local government. The aim of this study is to report the effectiveness of sustainable development policy and highlight the workable plans on improving energy efficiency with financial success.

Developing an Aggregate Index for Measuring Financial Stability in the Balkans

Financial stability continues to grow in importance and remains a hotly debated topic since the turn of the new century brought a string of financial episodes that culminated with the Global financial crisis of 2007. While the Balkans have traditionally been considered to lie on the periphery of financial phenomena, this wide assessment of the region has changed with the large-scale turmoil caused by the Greek Sovereign Debt crisis. Therefore, to curb nascent instability, financial authorities should remain alert and devise a mechanism able to effectively detect stress in their respective financial systems. So far – in the quest to build a comprehensive and universal Early Warning System – a number of broad measures and indicators have been proposed; however, none of them have been specifically tailored to reflect the distinct character of the Balkan countries with their diverse, yet analogous political, social and economic idiosyncrasies. This paper attempts to tackle this issue from a financial policy standpoint by contributing to the current literature on the subject in three separate ways. First, it builds upon the most recent findings in this area to develop an aggregate financial stability index that measures financial stability levels in nine countries geographically belonging to the Balkan region, entirely or at least in part. Most importantly, this index juxtaposes some well known IMF- backed Financial Soundness and macroprudential indicators with World Bank development indicators and CESifo measures of world economic climate. Second, the authors perform a Chanut-Laroque analysis of contribution to volatility levels in the aggregate stability index in order to explore which sub-indexes can explain the improvement or deterioration of the index value for the 1995-2011 period. Third, this paper compares and contrasts the evolution of financial stability of two sub-indices reflecting the diverging nature of the two groups of countries (Western Balkans vs. EU members) regarding their standing relative to European Union status.

The Relationship between Industrial Production, GDP, Inflation and Oil Price: The Case of Turkey

Abstract After the oil shock in 1973, the number of studies on causal relationship between oil price and macroeconomic variables has dramatically increased. This paper investigates the relationship among the oil price, inflation, GDP and industrial production for 1961 to 2012 period in the case of Turkey. Data used in the study was extracted from World Bank Development Indicators and the OPEC. Three different tests, namely unit root, co-integration and causality tests, have been employed to investigate the relationship among the variables. The results of Phillips-Perron (PP) as a unit root test suggests that all the variables under investigation are integrated of order one; I(1). Johansen co-integration results confirm a long-run relationship among these variables and Granger causality test illustrates the unidirectional relationship from oil price to industrial production.

Islamic vs. Conventional Banking Role in Non-Oil Growth: A Causal Analysis in the Case of Bahrain

This paper aims to investigate the type of relationship between Islamic vs. Conventional banking and non-Oil economic growth in the case of Bahrain by using annual data 1990-2012 retrieved from Islamic banks and financial institutions information (Ibis-Online) of the Islamic Bank of Development (IDB), World Bank development indicators (WB), and the Central Bank of Bahrain (CBB) annual reports.This study employs the Johansen and Juselius Cointegration test and Vector Error Correction Model (VECM) as well as Vector Autoregressive model (VAR) to reveal the long run and short-run causality between the dual banking development and non-Oil GDP growth. The VECM results of the conventional banking show that there is long-run bidirectional causality between all the conventional banking selected indicators and the non-Oil GDP. For the Islamic banking VAR model, there is a unidirectional causality from Islamic banking indicators to the non-oil GDP. There is no evidence on the role of non-oil GDP on the Islamic banking development. Impulse response functions in the two models shows that through one standards deviation positive shock in Islamic vs. Conventional Credit provided to private sector, the non-Oil GDP will be much higher in the next five years if we stimulate the Islamic credit provided to private sector than the conventional banks.Moreover, the Islamic credit provided to the private sector appears to be more procyclical than the credit provided by the conventional banks. However, the fluctuations in the conventional credit are sharper than the Islamic banks’ private credit. This study provides the policy makers in Bahrain with the appropriate evidences to design their policies in fostering the non-Oil sector.

Towards climate justice: How do the most vulnerable weigh environment–economy trade-offs?

The world’s poor are especially vulnerable to environmental disasters, including the adverse consequences of climate change. This creates a challenge for climate justice advocates who seek to ensure that those least responsible for causing climate change do not bear unwanted burdens of mitigation. One way to promote climate justice could be to pay particular attention to the environmental policy preferences of citizens from poorer, lower-emitting countries. This paper examines opinions on environment–economy trade-offs and willingness to make personal financial contributions to protect the environment among residents of 42 developed and developing countries using data from the 2005–2008 World Values Survey, the 2010 Climate Risk Index, and World Bank development indicators. Results reveal that individuals in developing countries are less likely to support policies to prioritize environmental protection over economic growth but are more willing to donate personal income for pro-environmental efforts compared to citizens of more developed nations.