Local provision of public services has the positive effect of increasing the efficiency because each locality has its idiosyncrasies that determine a particular demand for public services. This dissertation addresses different aspects of the local demand for public goods and services and their relationship with political incentives.
The text is divided in three essays. The first essay aims to test the existence of yardstick competition in education spending using panel data from Brazilian municipalities. The essay estimates two-regime spatial Durbin models with time and spatial fixed effects using maximum likelihood, where the regimes represent different electoral and educational accountability institutional settings. First, it is investigated whether the lame duck incumbents tend to engage in less strategic interaction as a result of the impossibility of reelection, which lowers the incentives for them to signal their type (good or bad) to the voters by mimicking their neighbors’ expenditures. Additionally, it is evaluated whether the lack of electorate support faced by the minority governments causes the incumbents to mimic the neighbors’ spending to a greater extent to increase their odds of reelection. Next, the essay estimates the effects of the institutional change introduced by the disclosure on April 2007 of the Basic Education Development Index (known as IDEB) and its goals on the strategic interaction at the municipality level. This institutional change potentially increased the incentives for incumbents to follow the national best practices in an attempt to signal their type to voters...
For many clothing companies the range of goods sold is renewed twice a year. Each new collection includes a large number of new items which have a short and well defined selling period corresponding to
one selling season (20-30 weeks). The absence of past sales data, changes in fashion and product design
causes difficulties in forecasting demand accurately. Thus, the predominant factors in this environment are the difficulty in obtaining accurate demand forecasts and the short selling season for goods. An inventory management system designed to operate in this context is therefore constrained by the fact that
demand for many goods will not generally continue into the future. Using data for one particular
company, the accuracy of demand forecasts obtained by traditional profile methods is analysed and a new approach to demand forecasting using artificial neural networks is presented. Some of the main questions
concerning the implementation of neural network models are discussed.; Fundos FEDER através do Programa Operacional Fatores de Competitividade – COMPETE e por Fundos Nacionais através da FCT – Fundação para a Ciência e Tecnologia, no âmbito do Projecto: FCOMP-01-0124-FEDER-022674.
The remote and sparsely populated
provinces of Papua and West Papua face a time of great
change. Monetary transfers from Jakarta have grown
extraordinarily in recent years, by more than 600 percent in
real terms and 1300 percent in nominal terms since 2000,
greatly increasing demand for goods and services. The high
price of imports in the interior is producing pressure to
improve roads in order to lower transport costs. Pressure is
mounting to open up the interior of the region to commercial
interests that would like to extract resources: copper,
gold, coal, petroleum, natural gas, and, above all, timber.
Investment in infrastructure, especially in road transport,
is seen as the means to make dreams of development a
reality. Building infrastructure in Papua and West Papua
also is challenging because of physical (i.e. topographical
and geological) conditions. Much of the region has either
poorly drained peat soils or steep slopes with thin soils
subject to landslides and erosion. Most of Papua and West
Papua also receive heavy seasonal rainfall. The cost of
building a good...
Since 2005, donors and development
agencies have increased the overall value of aid for trade
and put in place several mechanisms to channel such aid and
to ensure that it targets national priorities. This paper
reviews recent trends in the allocation of aid for trade and
analyses of its effectiveness. It identifies a number of
opportunities for concerted action to enhance the impact of
aid for trade initiatives, including greater involvement by
middle-income countries in the initiative (through improved
market access, investment flows, and knowledge transfers);
deeper engagement with the private sector -- a key source of
information on what works and what does not; a stronger
focus on improving the "behind the border"
policies that affect the efficiency of key services sectors
and help determine firm-level competitiveness; and a
stronger focus on monitoring and evaluation of results.
This paper is based on an evaluation of
the Zambian lending portfolio carried out in early 2011. The
paper begins by explaining the demand for good governance
(DFGG) concept, identifying its increasing prevalence as a
theme in World Bank discourse, locating it in a broader
development agenda, and drawing out its implications for
World Bank projects. The paper then presents the Zambian
lending projects as a case study, drawing out the factors
that contribute to DFGG success and failure on the ground.
The relevance of this Zambian case study is that it
demonstrates some of the particular challenges of trying to
move DFGG commitments from paper to practice. Nine projects
are considered in total. Each project is assessed for DFGG
mechanisms in the following four categories: transparency
and information, participation and consultation, monitoring
and oversight, and capacity enhancement. The established
mechanisms are considered according to a set of following
four criteria s: effectiveness, efficiency, inclusiveness,
and sustainability. This paper presents a background and
explanation of the DFGG concept...
On February 2, 2002, Lithuania switched
its currency anchor from the dollar to the euro. While
pegging to the dollar (since April 1994) has proven
successful throughout the transition years, the recent
decision to peg to the euro was motivated by the increasing
trade relations with European economies. Pizzati does not
argue which peg is more appropriate, but he analyzes the
implications of changing the exchange rate regime for
different sectors and labor groups. While pegging to the
euro entails more stability for the export sector, Lithuania
is still dependent on dollar-based imports of primary goods
from the Commonwealth of Independent States, more so than
other Baltic countries or Central European economies. The
author uses a multisector general equilibrium model to
compare the effects of dollar-euro exchange rate movements
under these alternative pegs. Overall, simulation results
suggest that while a euro-peg will provide more stability to
GDP and employment, it will also imply more volatility in
The authors describe the evolution of
relative wages in five Latin American countries-Argentina,
Brazil, Chile, Colombia, and Mexico. They use repeated
cross-sections of household surveys, and decompose the
evolution of relative wages into factors associated with
changes in relative supply and relative demand. The authors
have three main conclusions: 1) Increases in the relative
wages of the most skilled (university-educated) workers took
place concurrently with increases in their relative
abundance in all of the countries except Brazil. This is
strong evidence of increases in the demand for skilled
workers. 2) Increases in the wage bill of skilled workers
occurred largely within sectors, and in the same sectors in
different countries, which is consistent with skill-biased
technological change. 3) Trade appears to be an important
transmission mechanism. Increases in the demand for the most
skilled workers took place at a time when countries in Latin
America considerably increased the penetration of imports,
including imports of capital goods. The authors show that
changes in the volume and research and development intensity
of imports are significantly related to changes in the
demand for more skilled workers in Latin America. Their
research complements earlier work on the effects of
technology transmitted through trade on productivity and on
the demand for skilled labor.
Rapid growth in many low-income
economies was fuelled by the insertion of producers into
global value chains feeding into high-income northern
markets. This paper charts the evolution of financial and
economic crisis in the global economy and argues that the
likely outcome will be sustained growth in the two very
large Asian Driver economies of China and India and
stagnation in the historically dominant northern economies.
Given the nature of demand in low-income southern economies,
it is likely to be reflected in sustained demand for
commodities, with other southern economy producers in global
value chains being forced into lower levels of value added.
Standards are likely to be of considerably reduced
significance in value chains feeding into China and India.
As Brazil and China have become two
of the largest global economies, they have also become
increasingly connected. Three decades of fast-paced growth
and structural change have turned China into the world s
second-largest economy and have transformed it into an
upper-middle income country. Brazil, which had experienced
its own episode of high growth between 1965 and 1974, has
also become one of the largest economies. Over the last
decade, Brazil and China have developed increasingly close
linkages, which has come as no surprise given the scale of
their economies, the complementary structure of resource
endowments as well as the differences between the two
countries in the structure of production and demand. This
report examines how structural change in China is expected
to present new opportunities and challenges for Brazil to
enhance its global position and energize growth. Building on
recent work (World Bank and Development Research Center,
2013), this report identifies three potential longer-term
transformations of the Chinese economy structurally slower
The Global Poverty Report considers
the effects of globalizing markets on poverty in developing
countries. It outlines the channels through which increased
trade openness can affect poverty and examines the evidence
from four regions: Sub-Saharan Africa, Asia and the Pacific,
Eastern Europe and Central Asia, and Latin America and the
Caribbean. Written at the request of the G8, the report is
the result of a joint effort of the regional development
banks, the World Bank, and the International Monetary Fund.
Increased openness can affect an economy in various ways,
creating opportunities for the poor as well as risks. First,
it can affect the prices of goods and services that the poor
consume and produce, benefiting those who are net consumers
of goods that become cheaper and those who can obtain higher
prices for their products on international markets. Second,
it can affect the demand for and returns to factors of
production that the poor have to offer, such as labor.
Third, it can affect government revenue and the resources
available for antipoverty programs. Fourth...
The Rwanda Economic Update reports on and synthesizes recent economic developments and places them in a medium-term and global context. It analyzes the implications of these developments and policies for the outlook for Rwanda s economy. Rwanda s economic growth recovered in the first three quarters of 2014. The economy grew 7.1 percent. Faster GDP growth reflected higher growth of the services sector, at 9.1 percent, up from 5.4 percent in 2013, when the economy suffered from the lagged impact of the 2012 aid shortfall. The first section on macroeconomic issues of this edition of the Rwanda Economic Update examines two key questions: What led to the growth recovery in the first three quarters of 2014, and what are growth prospects for 2014, 2015, and 2016? The growth recovery mainly reflected increased government expenditure, which boosted domestic demand such as private consumption and investment. The expansion of domestic demand was partially offset by lower external demand for Rwanda s traditional commodities. Higher government expenditure contributed to growth recovery in the services sector through government consumption of private services. Inflation declined throughout 2014, reflecting lower growth in import prices. The recent decline in oil prices is expected to contribute not only to lower inflation but also to more stable exchange rate...
The devastating civil war in Syria is
arguably one of the major civil conflicts in recent times.
The conflict started with protests in March 2011 and soon
after escalated to a violent internal war with no end in
sight to this date. The conflict has by the end of 2014
caused well in excess of 150,000 fatalities, and 6 million
internally displaced people (UN), and led 3 million refugees
to move out of the country (UNHCR). Beyond the human
tragedy, the conflict has disrupted the functioning of the
economy in many ways. It has destroyed infrastructure,
prevented children from going to school, closed factories
and deterred investments and trade. The economic effects of
the war extend beyond the country’s borders affecting also
the neighboring countries. In particular trade is one of the
main channels through which the effects of the crisis are
transmitted to neighboring countries. For example, the
demand for goods and services in Syria is likely to have
fallen thus affecting the many exporters to Syria in
neighboring countries. Moreover...
The familiar 'small country' assumption is tested empirically in this paper, focussing upon the long-run international demand for Thailand's rice exports and drawing upon recent developments in the statistical analysis of economic time series. A relatively robust long-run price elasticity of export demand is obtained, at just under 2. The literature on the export demand for manufactured goods has shown the central importance of the 'normalisation' used during estimation. Our results suggest that this issue may not be as important in the case of primary commodity exports, at least not where the exporting country possesses a degree of monopoly power.; no
Rwanda's economic growth slowed in
the first half of 2013. Weighed by a slowdown in domestic
demand, the economy grew at a modest rate. Decelerating GDP
growth mirrored the low growth of services and was the
lowest half-year growth rate since 2010, when the domestic
economy was hard hit by the combination of the global
financial crisis and a domestic credit crunch. This edition
of the Rwanda Economic Update examines three key issues: 1)
the cause for the economic slowdown; 2) whether the economic
slowdown is temporary, or the beginning of further
deceleration, and the forecasted growth for 2014; and 3)
policy options for the authorities.
The differences in the levels of financial development between industrial and developing countries are large and persistent. Theoretical and empirical literature has argued that these differences are the source of comparative advantage and could therefore shape trade patterns. This paper points out the reverse link: financial development is influenced by comparative advantage. The authors illustrate this idea using a model in which a country's financial development is an equilibrium outcome of the economy's productive structure: financial systems are more developed in countries with large financially intensive sectors. After trade opening demand for external finance, and therefore financial development, are higher in a country that specializes in financially intensive goods. By contrast, financial development is lower in countries that primarily export goods which do not rely on external finance. The authors demonstrate this effect empirically using data on financial development and export patterns in a panel of 96 countries over the period 1970-99. Using trade data, they construct a summary measure of a country's external finance need of exports and relate it to the level of financial development. In order to overcome the simultaneity problem...
In an earlier paper, the authors
presented a mathematical exposition of a theory that
demonstrated that mass privatization without institutions to
limit asset-stripping may not lead to a demand for the rule
of law ["After the Big Bang? Obstacles to the Emergence
of the Rule of Law in Post-Communist Societies,"
American Economic Review 94(3), June 2004, pages 753-63].
This report makes the same argument in terms of simple
diagrams. The central idea is that economic actions (to
build value or strip assets) and political positions of
individuals are interdependent. "Big bang"
privatization may give individuals an interest in taking
what they can quickly, rather than waiting for the
establishment of property rights protection that would
permit them to build more valuable assets. Asset stripping
gives some of these individuals an interest in prolonging
the absence of the rule of law so that they can enjoy the
fruits of stripping without the constraint of government
enforcement of property rights. Each individual...
Are Belarus's state owned
enterprises positioned to grow in 2011-2015 as successfully
as in 1995-2006? State owned enterprises account for 55
percent of Belarus's output and two-thirds of overall
employment; economic growth in 1995-2006 was the result of
capacity expansion and productivity improvements in state
owned enterprises. These sources of economic growth
originated in policy decisions that preserved the
functioning of the command and control economy and allowed
the country to exploit preferential commercial access to the
Russian market in several goods and services. Are the same
reasons likely to facilitate the performance of state owned
enterprises and overall economic growth in 2011-2015? This
paper concludes that this is not likely to happen. Times
have changed: the slowdown in production and exports in
2009-2010 was unquestionably associated with a transitory
decline in demand for durable goods in Russia. But there
have also been more permanent market forces at work: a
steady increase in competition in Russia and other
Commonwealth of Independent States markets resulting from
low-price Chinese and Russian-produced capital goods; and a
shift in demand from low-quality/low price to high-quality...
While there is a consensus that the
2008-2009 crisis was triggered by financial market
disruptions in the United States, there is little agreement
on whether the transmission of the crisis and the subsequent
prolonged recession are due to credit factors or to a
collapse of demand for goods and services. This paper
assesses whether the primary effect of the global crisis on
Eastern European firms took the form of an adverse demand
shock or a credit crunch. Using a unique firm survey
conducted by the World Bank in six Eastern European
countries during the 2008-2009 financial crisis, the paper
shows that the drop in demand for firms' products and
services was overwhelmingly reported as the most damaging
adverse effect of the crisis. Other "usual
suspects," such as rising debt or reduced access to
credit, are reported as minor. The paper also finds that the
changes in firms' sales and installed capacity are
significantly and robustly correlated with the demand
sensitivity of the sector in which the firms operate.
How does perceived drinking water quality affect household willingness to pay (WTP) for clean water in rural Cambodia?
Inadequate access to improved water and sanitation in the developing world continues to be a major public health and development challenge. UNICEF estimates that nearly 2 million child deaths are attributable to diarrhea (UNICEF, 2008). The excessive burden of diarrhea-related morbidity and mortality is partly attributable to inadequate access to safe drinking water. Poor access to high-quality and convenient water sources may partly be a problem of low demand (Whittington et al., 2009). In fact, there is relatively limited evidence in the literature on demand for water and sanitation services.
In this paper, we consider the demand for improved water quality only (rather than changes in both quality and convenience) in two communities in Kandal province, Cambodia. Importantly, many households in these communities already have access to convenient sources of water, either in the form of private connections to piped water networks, or via rainwater harvesting and storage where they live. These sources, however, are of variable quality, and water treatment, both at the system or household-level...
This paper explains the nonneutrality of money from two assumptions: (1) consumers dislike paying prices that exceed some fair markup on firms’ marginal costs; and (2) consumers under infer marginal costs from available information. After an increase in money supply, consumers underappreciate the increase in nominal marginal costs and hence partially misattribute higher prices to higher markups; they perceive transactions as less fair, which increases the price elasticity of their demand for goods; firms respond by reducing markups; in equilibrium, output increases. By raising perceived markups, increased money supply inflicts a psychological cost on consumers that can offset the benefit of increased output.