World Bank Research E-Newsletter, March 2011: Disasters, Migration and More - How Natural Disasters Affect Public Finances
- Alternative Energy Sources Face Technological and Economic Challenges
- Immigration Improved the Income Distribution of European Countries
- Understanding the Impact of Migration on Food Security and Nutrition
- The Rise of Large Farms: Do They Have a Future?
- International Certification and Internet Use Linked to Success in Exports
- Opportunities to Increase Rice Production in Africa
- Biometric Identification Can Increase Loan Repayment Rates
- A New Way to Look at Movements in and out of Poverty•
- Media Access Affects Education by Changing Private Household Behavior, Not Holding Government Accountable
- New Issue of The World Bank Research Digest
- Announcement: The World Bank Releases Database on Conflict
- From the Blogs
- List of New Policy Research Working Papers
How Natural Disasters Affect Public Finances
As the world faces more natural catastrophes, such as droughts, earthquakes and wild fires, a new working paper by Martin Melecky and Claudio Raddatz systematically gauges their impact on the global gross domestic product and government expenditures and revenues. Drawing on data covering annual government finances in high- and middle-income countries from 1975 to 2008, the authors find that natural disasters drive down output and increase deficits, especially in the poorest middle-income countries. Indeed, while on average government deficits go up only after climate-related disasters, all events push up deficits in these countries. A country's debt level at the onset of disaster doesn't appear to affect the fiscal impact of the disaster. Rather, it seems to indicate good access to credit. Countries with higher financial development suffer less from disasters, but their deficits expand further. By contrast, the availability of private insurance reduces the impact of natural disasters on GDP without causing an increase in government spending. Thus, insurance penetration seems to offer the best ex-post mitigation approach against real and fiscal consequences of disasters, although a complete evaluation should also consider the costs associated with different alternatives.
World Bank Policy Research Working Paper 5564
Alternative Energy Sources Face Technological and Economic Challenges
The transition to a low-carbon economy will likely be much more challenging than optimists have claimed, according to a new working paper by Ioannis Kessides and David C. Wade. Key requirements for sustainable energy-supply infrastructure include: abundance of the energy resource, a small carbon footprint and the ability to be scaled up to meet a large, absolute increase in the global demand for energy. Coal-fired generation meets the criteria of abundance of the energy source and scalability, but it carries a very large carbon footprint. Although renewable energy and nuclear power meet both the criteria of longevity and climate friendliness, their abilities vary in delivering energy at a scale needed to meet huge global energy demand. The low density of renewable resources to generate electricity, as well as the current intermittency of many renewables, means they have limited ability to achieve high rates of growth. A significant increase in global nuclear power deployment, meanwhile, could carry serious risks related to proliferation, safety and waste disposal. And, unlike renewable sources of energy, nuclear power is an unforgiving technology, because human lapses and errors can have catastrophic, irreversible ecological and social impacts.
World Bank Policy Research Working Paper 5539
Immigration Improved the Income Distribution of European Countries
Contrary to popular beliefs, emigration -- not immigration -- negatively impacts the wages of natives in high-income countries, especially European countries, according to a new working paper by Frederic Docquier, Caglar zden and Giovanni Peri. Using a new dataset on migration flows by education level, the research shows immigration from 1990 to 2000 had a zero to positive effect on the average wages of natives, ranging from zero in Italy to +1.0 percent in the United Kingdom. Meanwhile, emigration in the same period had a mild to negative effect, ranging from –0.1 percent in France to −0.8 percent in the U.K. In addition, immigration generally improved the income distribution of European countries while emigration worsened it by increasing the wage gap between the high and low-skilled non-migrant natives. These patterns hold true even when including undocumented immigrants and correcting for the quality of schooling and/or downgrading of skills in the destination labor markets. The authors say the main results are driven by the fact that both immigrants and emigrants during 1990-2000 were more educated than non-migrants.
World Bank Policy Research Working Paper 5556
Understanding the Impact of Migration on Food Security and Nutrition
Migration and remittances in the developing world have increased dramatically in the last decade, just when more focus has been placed on reducing malnutrition to achieve the Millennium Development Goals. But little empirical evidence exists on the link between migration and nutrition. A special issue of Food Policy tries to fill that gap by analyzing the links between migration and nutrition in seven countries: China, El Salvador, Ghana, Guatemala, Tajikistan, Tonga, and Vietnam. The research finds migration is linked to improvements in child growth. It also boosts a households' ability to deal with adverse food-related shocks, although their dietary habits and time devoted to health and care activities may suffer.
"Assessing the Impact of Migration on Food and Nutrition Security", edited by Alberto Zezza, Calogero Carletto, Benjamin Davis, and Paul Winters. Special issue of Food Policy36 (Issue 1): 1-100.
The Rise of Large Farms: Do They Have a Future?
Higher demand for agricultural products -- for food, feed, biofuel production and other uses -- has led to an increase in the number and size of large farms. This trend is notable in land-abundant countries in Latin America, Eastern Europe, Southeast Asia (mainly for the production of perennials), and recently, sub-Saharan Africa. In a new working paper, Klaus Deininger and Derek Byerlee offer a historical review of the growth of large farms and their impact. They investigate why owner-operated, small farm structures dominate and how they may evolve with development. The authors suggest that assessing the advantages of large operations, along with information about available resources, can help a country formulate an appropriate development strategy. A review of recent land-acquisition cases suggests that, for investments to provide economic and social benefits, the public sector needs to implement policies that allow contracts to be enforced and help local people negotiate and determine the desirability of investments. The research points to three priority areas (i) recognition of rights to, and proper valuation of, land; (ii) impact on the labor market, and technical, as well as economic, viability; and (iii) the ability to reallocate land flexibly in case an investment fails.
World Bank Policy Research Working Paper 5588 | For this and other papers on agriculture and food prices, click this link
International Certification and Internet Use Linked to Success in Exports
Besides superior productivity, what factors drive success in exports? A new working paper by Esteban Ferro finds that certification by the International Standards Organization is the biggest factor, boosting the likelihood that a firm is an exporter by about 22 percent and the proportion of sales in foreign markets by 41 percent. Internet use is also important: firms are 11 percent more likely to be exporters if they use their Web site to communicate with clients and suppliers, and those using e-mail sell 31 percent more in foreign markets than exporting firms that do not. Other factors linked to exporting firms are size and foreign ownership, according to the research, which draws on data from the World Bank's Enterprise Surveys. The research is important because public export-assistance programs have generally focused on providing information about key export markets and educating firms about the importance of exporting. The study suggests that firms should also be encouraged to embrace international certifications and use the Internet.
World Bank Policy Research Working Paper 5547
Opportunities to Increase Rice Production in Africa
Donors and governments have been reluctant to invest in large-scale irrigation in sub-Saharan Africa because of high investment costs and declining rice prices. It doesn't help that the performance of some large-scale gravity irrigation projects led by governments in Asia has been declining. But the conditions for growing irrigated rice have improved in sub-Saharan Africa, according to a new working paper by Yuko Nakano, Ibrahim Bamba, Aliou Diagne, Keijiro Otsuka, and Kei Kajisa. The price of rice has risen, and reforms in African countries have changed the institutional and policy environment for growing rice in large irrigation schemes. There are attractive opportunities to raise the productivity of rice, which requires adequate irrigation, chemical fertilizers and labor. Currently, chemical fertilizer is expensive, especially in Uganda and Mozambique. In addition, farmers often have unreliable access to water, which is required for both fertilizers and irrigation. In large irrigation schemes in four Sahelian countries of West Africa's Sahel region, which offers easy access to water, rice farmers achieve attractive yields when they have governmental and non-governmental support for chemical fertilizer. In places where wage rates are high, mechanization can help. Improved access to credit can facilitate the purchase of fertilizer or the hiring of labor. The research draws on household survey data from a variety of large-scale irrigation schemes in Burkina Faso, Mali, Mozambique, Niger, Senegal, and Uganda.
World Bank Policy Research Working Paper 5560
Biometric Identification Can Increase Loan Repayment Rates
In countries that lack a unique personal identification system, identity fraud, which allows defaulted borrowers to obtain a new loan, is so common that lenders tend to restrict the supply of credit. A field experiment in rural Malawi -- the first randomized trial of its kind -- shows that repayment rates are much higher among fingerprinted loan applicants, according to a new working paper by Xavier Gine, Jessica Goldberg and Dean Yang. That is particularly true among borrowers with higher ex-ante default risk, because biometric technology makes it easier to deny credit access to those who previously defaulted. The payment rates are pushed higher by two factors: a reduction in adverse selection (fingerprinted high-risk borrowers took out smaller loans) and lower moral hazard (fingerprinted borrowers diverted less of the loan from its intended purpose). A cost-benefit analysis of the pilot experiment suggests that the benefits greatly outweigh the costs of equipment and fingerprint collection.
World Bank Policy Research Working Paper 5438
A New Way to Look at Movements in and out of Poverty
It is widely believed that the poor frequently dip in and out of poverty, but panel data, which track the same households or individuals over time, are hard to come by in developing countries. In a new working paper, Peter Lanjouw, Jill Luoto and David McKenzie find a new way to track these movements using multiple years of cross-sectional household surveys. To study poverty duration and mobility, the method develops pseudo-panels, which track individuals of the same characteristics, rather than tracking the exact same individuals. The method, at best, offers insights into approximate bounds of mobility. But the authors show that under ideal circumstances, these bounds can be made narrow enough to yield useful insights. The paper uses samples from multiple years of cross-sectional household surveys for Vietnam and Indonesia, and then compares the findings to real panel estimates. The results are encouraging, which suggests that the method can offer some basic insights into mobility and poverty duration in places that historically lack the data necessary to conduct such analysis.
World Bank Policy Research Working Paper 5550
Media Access Affects Education by Changing Private Household Behavior, Not Holding Government Accountable
Donors have long supported greater citizen access to mass media to improve government accountability. A natural experiment in Benin shows for the first time that media access affects public services, but by changing household behavior, not by holding governments accountable, according to a new working paper by Philip Keefer and Stuti Khemani. The research draws on data from a March 2009 survey, which covers more than 4,000 households and 210 villages, as well as a literacy test given to 2,100 second-graders, in 32 of the 77 communes in Benin. The authors focus on noncommercial, community radio stations, which are more likely to broadcast public health and education information. In fact, literacy rates were higher in villages receiving signals from a larger number of stations. If community radio had increased accountability, those villages should have seen higher government investment in their schools, and households should have known more about the government's education policies. But this wasn't the case. Instead, community radio exposure encouraged households to invest financially in their children's education. If media access alone doesn't influence education outcomes through greater government accountability, we need to better understand interventions that can.
World Bank Policy Research Working Paper 5559
New Issue of The World Bank Research Digest
This quarter's issue of the Research Digest discusses: 1) Growth and development at the center of the G-20 agenda; 2) food price inflation in South Asia; 3) the possibilities and limits of a saving-based growth agenda in Egypt; 4) how easier access to HIV/AIDS treatment can affect perceptions of risk and behavior; 5) new ways of thinking about investment climate; 6) lessons on bank regulation from the financial crisis.
The World Bank Research Digest (Winter 2011)
ANNOUNCEMENT
The World Bank Releases Database on Conflict
The World Bank, which will publish The 2011 World Development Report: Conflict, Security, and Development in April, has built a database covering civil wars, homicides, terrorism, and trafficking. It also includes data on socio-economics, demographics and politics. The database includes more than 300 variables in one place, available online through the World Bank's open-data initiative http://data.worldbank.org. Until now, such data were dispersed. The database is also available here in a user-friendly bubble chart.
FROM THE BLOGS
Gender Equality and the 2012 World Development Report (Let's Talk Development blog, World Bank)
"Equality between men and women matters for development, which is why the 2012 World Development Report (WDR) will focus on this vital topic. Since the 100th anniversary of International Women's Day is March 8, we thought it an auspicious day to launch the WDR 2012 website.
Gender was chosen as the focus for next year's WDR in part because gender equality can lead to better development outcomes and because, as Amartya Sen asserted, development is a process of expanding freedoms equally for all individuals. This view assumes that gender equality is a core goal in and of itself and that people's welfare shouldn't be determined by their birthplace or whether they were born male or female."
Read the entire post by World Bank Chief Economist Justin Lin.
Do We Need Big Banks? (VoxEU blog)
"Today's big banks are enormous. By 2008, 12 banks worldwide had liabilities exceeding $1 trillion. This column, using data on banks from 80 countries over the years 1991-2009, provides new evidence on how large banks differ in terms of their risk and return outcomes, and investigates how market perceptions of bank risk are affected by bank size. It concludes that policies should reward bank managers for keeping their banks safe rather than for making them big."
Read the entire blog co-authored by Asli Demirgüç-Kunt, senior research manager of finance and the private sector in the World Bank's Development Research Group and Chief Economist of the Financial and Private Sector Development Network.
The Wealth of African Nations (Africa Can…End Poverty blog, World Bank)
"The big story is that, from 1995 to 2005, many countries in sub-Saharan Africa grew their total wealth faster than the world average -- a major African success story.
The Changing Wealth of Nations presents comprehensive wealth accounts, including produced, natural and intangible wealth (an amalgam of human and institutional capital) for over 120 countries. Aggregate natural wealth in Africa, including agricultural land, forests, minerals and energy, is twice as large as produced wealth, while intangible wealth (human and institutional capital) dominates in Africa, as in most countries of the world.
Since natural wealth is important for Africa, how have the fourteen extractive economies where mineral and energy rents exceed 5% of Gross Domestic Product (GDP) in 2008 fared? Comparing gross domestic saving with a measure of saving adjusted to reflect dividend payments abroad and depletion of natural resources, we see that wealth creation has been sharply negative in these countries from 1990 to 2008."
Read the entire post by Kirk Hamilton, a lead economist in the World Bank's Development Research Group and co-author of The Changing Wealth of Nations.
NEW POLICY RESEARCH WORKING PAPERS
5575. Chronic Diseases and Labor Market Outcomes in Egypt by Lorenzo Rocco, Kimie Tanabe, Marc Suhrcke, and Elena Fumagalli
5576. Do We Need Big Banks? Evidence on Performance, Strategy and Market Discipline by Asli Demirguc-Kunt and Harry Huizinga
5577. Petroleum Subsidies in Yemen: Leveraging Reform for Development by Clemens Breisinger, Wilfried Engelke, and Olivier Ecker
5578. Primary Commodity Prices: Co-movements, Common Factors and Fundamentals by Joseph P. Byrne, Giorgio Fazio, and Norbert Fiess
5579. How Does Public Information on Central Bank Intervention Strategies Affect Exchange Rate Volatility? The Case of Peru by B. Gabriela Mundaca
5580. On Multidimensional Indices of Poverty by Martin Ravallion
5581. Trade Integration as a Way Forward for the Arab World: A Regional Agenda by Jean-Pierre Chauffour
5582. Risk-Coping through Sexual Networks: Evidence from Client Transfers in Kenya by Jonathan Robinson and Ethan Yeh
5583. How Do Special Economic Zones and Industrial Clusters Drive China's Rapid Development? by Douglas Zhihua Zeng
5584. Using the Oaxaca-Blinder Decomposition Technique to Analyze Learning Outcomes Changes over Time: An Application to Indonesia's Results in PISA Mathematics by Felipe Barrera-Osorio, Vicente Garcia-Moreno, Harry Anthony Patrinos, and Emilio Porta
5585. The Impact of Export Tax Incentives on Export Performance: Evidence from the Automotive Sector in South Africa by Dorsati H. Madani and Natalia Mas-Guix
5586. Information Asymmetries and Institutional Investor Mandates by Tatiana Didier
5587. Laws for Fiscal Responsibility for Subnational Discipline: International Experience by Lili Liu and Steven B. Webb
5588. The Rise of Large Farms in Land Abundant Countries: Do they have a future? by Klaus Deininger and Derek Byerlee
5589. Was growth in Egypt between 2005 and 2008 pro-poor? From static to dynamic poverty profile by Daniela Marotta, Ruslan Yemtsov, Heba El-Laithy, Hala Abou-Ali, Sherine Al-Shawarby
5590. Over the Hedge: Exchange Rate Volatility, Commodity Price Correlations, and the Structure of Trade by Claudio Raddatz
5591. Impacts of International Migration and Remittances on Child Outcomes and Labor Supply in Indonesia: How Does Gender Matter? by Trang Nguyen and Ririn Purnamasari
5592. Finding a Balance between Growth and Vulnerability Trade-Offs -- Lessons from Emerging Europe and the CIS by Swati Ghosh, Naotaka Sugawara, and Juan Zalduendo
5593. Exchange Rate uncertainty and Optimal Participation in International Trade by Gabriela Mundaca
5594. Cote d'Ivoire's Infrastructure: A Continental Perspective by Vivien Foster and Nataliya Pushak
5595. Ethiopia's Infrastructure: A Continental Perspective by Vivien Foster and Elvira Morella
5596. Kenya's Infrastructure: A Continental Perspective by Cecilia M. Briceno-Garmendia and Maria Shkaratan
5597. Liberia's Infrastructure: A Continental Perspective by Vivien Foster and Nataliya Pushak
5598. Malawi's Infrastructure: A Continental Perspective by Vivien Foster and Maria Shkaratan
5599. Zambia's Infrastructure: A Continental Perspective by Vivien Foster and Carolina Dominguez
5600. Ghana's Infrastructure: A Continental Perspective by Vivien Foster and Nataliya Pushak.
5601. A Practical Comparison of the Bivariate Probit and Linear IV Estimators by Richard C. Chiburis, Jishnu Das, and Michael Lokshin
5602. The Democratic Republic of Congo's Infrastructure: A Continental Perspective by Vivien Foster and Daniel Alberto Benitez
5603. Would Freeing Up World Trade Reduce Poverty and Inequality? The Vexed Role of Agricultural Distortions by Kym Anderson, John Cockburn, and Will Martin
5604. Food Insecurity and Public Agricultural Spending in Bolivia: Putting Money Where Your Mouth Is? by Jose Cuesta, Svetlana Edmeades, and Lucia Madrigal
5605. Sudden Stops and Financial Frictions: Evidence from Industry Level Data by Kevin Cowan and Claudio Raddatz
5606. Service Export Sophistication and Economic Growth by Saurabh Mishra, Susanna Lundstrom, and Rahul Anand
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