Other Public Sector Study

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Return on Investment of Public Support to SMEs and Innovation in Poland
(World Bank, Washington, DC, 2019-12-31) World Bank
A Smarter Europe is a top priority of the European Union (EU), the core of which is innovation, economic transformation, and more competitive small and medium enterprises (SMEs). These themes account for a huge part of EU spending in the past, present, and future programming periods. Despite high expenditures, impacts on the economy often appear modest or are not well understood. EU, national, and regional policymakers want to know where and how to invest to get the highest return on investment (ROI). Poland was selected as the pilot country, since it is the largest recipient of EU funding, and has a rich set of support measures and implementing bodies. The remainder of the document is organized as follows. Section 2 summarizes the assessment of the needs of the Polish ecosystem, along with the portfolio mapping and policy mix analysis. Section 3 summarizes the functional analysis methodology and findings. Section 4 describes the ROI/effectiveness methodology and findings. And Section 5 offers conclusions and recommendations based on the combined analyses.
Mainstreaming Citizen Engagement through the World Bank Group’s Country Engagement Model
(World Bank, Washington, DC, 2019-12-01) Masud, Harika; Kumagai, Saki; Grandvoinnet, Helene
Efforts to mainstream citizen engagement into the Country Partnership Framework (CPF) cycle have the potential to contribute toward achieving country development goals and the World Bank Group’s twin goals of ending extreme poverty and boosting shared prosperity by maximizing the impact of citizen-centric initiatives. Informed by the findings of a desk review of the Systematic Country Diagnostic (SCD) and corresponding CPF from FY14 to FY19, this technical note is intended to serve as a resource for World Bank task teams to elaborate on options and entry points for systematic mainstreaming of citizen engagement in the CPF cycle, specifically in preparing the SCDs, CPFs, Performance and Learning Reviews, and Completion and Learning Reviews.
The Welfare and Distributional Effects of Increasing Taxes on Tobacco in Vietnam
(World Bank, Washington, DC, 2019-06) Fuchs Tarlovsky, Alan; Gonzalez Icaza, Fernanda
This paper assesses the welfare and distributional effects of raising taxes on tobaccoin Vietnam. Tobacco taxes are recognized as effective policy tools to reduce tobaccoconsumption and to improve health outcomes. However, policy makers often hesitateto use them because of claims of their potentially regressive effects. According to thoseclaims, poorer households are particularly hurt by tobacco tax policies, as cigarettepurchases represent a larger share of their budgets relative to higher-income smokers.The paper argues that the claims on the regressive effects of tobacco tax policies arebased on naive, shortsighted, and incorrect estimations. Tobacco-related illnessesdamage health outcomes and the quality of the lives of smokers and their families, whilethey also cost billions of dollars in medical expenditures and losses in human capital andproductivity every year. Tobacco consumption imposes heavy economic burdens onhouseholds and governments, in addition to its well-known negative health and socialimpacts. Raising taxes on cigarettes dissuades consumption, hence improving healthoutcomes, adverting premature deaths, and reducing direct and indirect economic costs.The analysis applies the Extended Cost Benefit Analysis (ECBA) methodology to simulateempirically the costs, as well as the benefits of increasing the prices on cigarettes onthe welfare of Vietnamese households. Following a well-established body of literature,the ECBA acknowledges that there may be short-term direct negative effects of raisingprices on tobacco, as smokers can struggle to continue to purchase tobacco with theirunchanged household budgets. However, the model also incorporates two of the mainbenefits of reducing tobacco consumption by increasing taxes: (a) the reduction insmoking-related medical expenses borne by households and (b) the additional incomesthat households can earn by preventing years of productive life lost due to smoking attributablepremature deaths. A critical contribution of the ECBA is to incorporate decile-specific price elasticities of demand for cigarettes, to quantify the behavioral responses or sensitivity of smokers in different income groups to changes in cigarette prices. To the knowledge of the authors, this is the first available empirical exercise to estimate price elasticities by income decile in Vietnam. Consistent with the literature and with empirical findings in other countries, the price elasticities of demand for cigarettes are larger for lower-income households. Lower income smokers are likely to reduce their tobacco consumption more drastically, when faced with a price increase. The ultimate distributional effect on welfare of the increasein the price of cigarettes due to tax increases will then depend on assessing the potentialbenefits against the short-term costs.
Regulatory Governance for Development and Growth: Malaysia's Experience with Good Regulatory Practices
(World Bank, Malaysia, 2019-06) World Bank Group
Good Regulatory Practices (GRP) are a systematic application of tools, institutions, and procedures that governments can mobilize to ensure that regulatory outcomes are effective, transparent, inclusive, and sustained. Other terms used for GRP include ‘regulatory governance’ and ‘better regulation.’ Among the most common GRP tools used by governments are: public consultation, ex ante regulatory impact analysis (RIA), ex post review of existing regulations, administrative simplification, access to laws and regulations, forward regulatory planning, and regulatory oversight functions. This report focuses on GRP because by improving the regulatory environment, they can boost conditions for sustainable growth and investment. This is evidenced, among others, in the World Bank Group’s Global Investment Competitiveness Report 2017-2018, which surveyed 750 investors in developing and transition economies. The report found that next to ‘political stability and security’, the ‘legal and regulatory environment’ was the most important consideration of senior executives when making investment decisions (WBG, 2018). Similarly, evidence shows a positive relationship between the improvement of the regulatory environment and aggregate investment (and economic growth), suggesting that countries stand to gain from a broad push for streamlining regulations and procedures affecting business (Eifert, 2009). The report reflects on Malaysia’s formal experience with GRP because, although launched only relatively recently, results have been remarkable. Malaysia has demonstrated that more business-friendly regulations and a more favorable regulatory environment can contribute to economic growth and investment. Moreover, Malaysia’s regulatory reform success has been reflected in many international indicators, such as the Global Indicators of Regulatory Governance, Worldwide Governance Indicators, Doing Business, (all produced by the WBG) and those from the World Economic Forum that measure the burden of government regulations and transparency of the policymaking process. International indicators measuring GRP performance show that Malaysia is converging with high-income OECD countries.
Guinea - Opportunities for Enhanced Domestic Revenue Mobilization: Value-Added Tax and Excise Taxes
(World Bank, Washington, DC, 2019-05-01) World Bank
Revenue mobilization is a key constraint to economic development in the Republic of Guinea. The government’s five-year development plan (2016-2020) aims at fostering higher and more inclusive growth through public investments that require financing beyond current fiscal capacity. In this context, Guinea is seeking to efficiently raise additional domestic revenues and external investment financing. Development partners are supporting Guinea with technical assistance for revenue mobilization. The International Monetary Fund (IMF) and the European Union are supporting authorities with direct tax policy, non-tax revenue, and administration issues. The objective of this report is to shed light on indirect taxes, particularly value-added tax (VAT) and excise taxes. The report provides an overview of the main features of tax policy and administration in Guinea, followed by a more detailed analysis of VAT and excise taxes. The focus on indirect taxation is a result of both its significant revenue potential and coordination with other development partners. The analysis presented fills an important gap in the understanding of how Guinea can increase its tax revenues. On VAT, the study finds that addressing policy and administrative constraints can mobilize additional revenues while improving the business climate. On excise taxation, the study finds that existing excise rates are unevenly applied, with scope for raising rates in the future. To systematically address its revenue challenges across all tax types, Guinea should also consider development of a medium-term revenue strategy (MTRS). The report is structured as follows: in the first section, an overview of the evolution and composition of domestic revenues in Guinea is presented. In the second section, VAT is analyzed. The final section reviews excise tax policy and its implementation on international goods and domestic goods.
South Africa ID Case Study
(World Bank, Washington, DC, 2019-05-01) World Bank
South Africa’s approach to identification offers valuable lessons for countries looking to increase the coverage, robustness, and use of their ID systems. Since the end of apartheid, South Africa’s national identification system has been transformed from a tool of oppression to one for inclusion and the delivery of social services. The ID system is now closely integrated with civil registration, boasts high coverage among all segments of the population, and has been instrumental for effective service delivery and a cost effective electoral process.
Gabon: Assessment of the Impact of Tobacco Excise Tax Increases on Price, Consumption and Tax Revenue over 2018-2021
(World Bank, Washington, DC, 2019-04-25) World Bank Group
This report presents the results of the assessment that simulates the fiscal revenue and consumption impact of proposed tobacco tax increases in Gabon in the period 2018–2021.
Time to Quit: The Tobacco Tax Increase and Household Welfare in Bosnia and Herzegovina
(World Bank, Washington, DC, 2019-01) Fuchs, Alan; Orlic, Edvard; Cancho, Cesar
This paper uses an extended cost-benefit analysis to estimate the distributional effect of tobacco tax increases in Bosnia and Herzegovina. The analysis considers the effect on household income of an increase in tobacco prices, changes in medical expenses, and the prolongation of working years under various scenarios, based on data in three waves of the national Household Budget Survey. One critical contribution is a quantification of the impacts by allowing price elasticities to vary across consumption deciles. The results indicate that a rise in tobacco prices generates positive income variations across the lowest income groups in the population (the bottom 20 percent). At the same time, tobacco price increases have negative income effects among middle-income and upper-income groups. These effects are larger, the higher the income level. If benefits through lower medical expenses and an expansion in working years are considered, the positive effect is acerbated among the lowest income groups. The middle of the distribution sees the income effect turn from negative to positive, and the top 40 percent, although continuing to experience a negative effect, see the magnitude of this effect diminish. Altogether, these effects mean that increases in tobacco prices have a pro-poor, progressive effect in Bosnia and Herzegovina. These results also hold within entities and across urban and rural areas.
Creating a New Tourism Licensing and Grading System: Lessons from Rwanda
(World Bank, Washington, DC, 2019) International Finance Corporation
The tourism sector in Rwanda is growing rapidly, largely driven by gorilla trekking and the Meetings, Conventions, Incentives and Exhibitions (MICE) segments. Despite this growth and government prioritization of tourism, there had been a gap in the regulation of the tourism sector, which was potentially affecting the attractiveness of the Rwandan market as a tourism destination and reducing the competitiveness of firms providing tourism services. To help address this gap, the World Bank Group (WBG), through the International Finance Corporation (IFC) Advisory Services, provided technical assistance in Rwanda over three years to support the creation of a new tourism regulatory agency, operationalize two new regulations, and license over 400 tourism entities under challenging time and resource constraints. In working with the Government of Rwanda and other stakeholders, IFC learned several lessons that may be useful to other practitioners who are considering: how to create and develop a regulatory regime from scratch to respond to a specific regulatory gap; how to place an emphasis on implementation beyond pure policy work; and how to be flexible and innovative to make the system as efficient as possible under time and resource constraints. This note sets out what was achieved, how it was achieved, and what was learned in the process. Together with material on global best practices, it is designed to provide a practical case study and share implementation insight for.
Stimulating Business Angels in the Czech Republic
(World Bank, Washington, DC, 2018-10) World Bank Group
This report provides a systematic assessment of business angel activities, and the ecosystem surrounding innovation finance, in the Czech Republic. Based on literature reviews, published data sources and local stakeholder interviews, the report distills findings related to the demand for and supply of risk investments, and offers policy recommendations for stimulating business angels. The report characterizes the Angel ecosystem as emerging with potential for growth. It is small both in terms of the number of investors and the amount invested. There appears to be a general lack of syndication of investments and concentration of investments in the capital (Prague) and in the information, communication, and technology (ICT) sector. On the demand side, a credible deal flow does exist, although it falls short of constituting a critical mass needed to support the development of the market. While issues in the local environment may affect the flow of angel investments, these are not insurmountable, based on the country’s competitive ranking on relevant global and European indicators. Finally, the report proposes a number of policy recommendations for enhancing business angel awareness and investments, including data collection and mapping of early stage market activities (short-term), creation of Czech National Angel Association (medium-term), and implementation of incentivization measures such as co-investment funds and tax incentives (long-term).