C. Journal articles published externally
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These are journal articles by World Bank authors published externally.
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Publication
Economic Growth, Convergence, and World Food Demand and Supply
(Elsevier, 2020-08)In recent years, developing countries have been growing much more rapidly than the industrial countries. This growth convergence has potentially very important implications for world food demand and for world agriculture because of the increase in demand for agricultural resources as diets shift away from starchy staples and towards animal-based products and fruits and vegetables. Using a resource-based measure of food production and consumption that accounts for the much higher production costs associated with animal-based foods, this article finds per capita demand growth to be a more important driver of food demand than population growth between now and 2050. Using the middle-ground Shared Socioeconomic Pathway scenario to 2050 from the International Institute for Applied Systems Analysis, which assumes continued income convergence, the article finds that the increase in food demand (102 percent) would be about a third greater than under a hypothetical scenario of all countries growing at the same rate (78 percent). As convergence increases the growth of food supply by less than demand, it appears to be a driver of upward pressure on world food prices. -
Publication
The Devil is in the Detail: Growth, Inequality and Poverty Reduction in Africa in the Last Two Decades
(Oxford University Press, 2019-08)The present paper, starting from evidence of low growth-to-poverty elasticity characterizing Africa, purports to identify the distributional changes that limited the pro-poor impact of the last two decades’ growth. Distributional changes that went undetected by standard inequality measures were not showing a clear pattern of inequality on the continent. By applying a new decomposition technique based on a non-parametric method—the ‘relative distribution’—we found a clear distributional pattern affecting almost all analysed countries. Nineteen out twenty four countries experienced a significant increase in polarization, particularly in the lower tail of the distribution, and this distributional change lowered the pro-poor impact of growth substantially. Without this unfavorable redistribution, poverty could have decreased in these countries by an additional five percentage points. -
Publication
The Rise of the Middle Class and Economic Growth in ASEAN
(Elsevier, 2018-01-05)We present instrumental variables estimates of the relationship between the share of income accruing to the middle class and GDP per capita. The increase in GDP per capita that ASEAN economies experienced during 1970–2010 significantly contributed to a higher share of income accruing to the middle class in these countries. Econometric model estimates show that the impact of a rise of the middle class on economic growth depends on initial levels of GDP per capita. In the majority of ASEAN countries, a rise of the middle class that is unrelated to GDP per capita growth would have had a significant negative effect on economic growth for levels of ASEAN economies' GDP per capita in 1970. In contrast, for recent values of GDP per capita a rise of the middle class would positively contribute to growth of GDP per capita in ASEAN. We show that investment is an important channel through which the income share of the middle class affects economic growth. -
Publication
The Health Gains, Financial Risk Protection Benefits, and Distributional Impact of Increased Tobacco Taxes in Armenia
(Taylor and Francis, 2018-01)The majority of Armenian adult males smoke, yet tobacco taxes in Armenia are among the lowest in Europe and Central Asia. Increasing taxes on tobacco is one of the most cost-effective public health interventions, but many opponents often cite regressivity as an argument against tobacco taxation. We use a mixed-methods approach to study the potential regressivity of tobacco taxation and the extent to which the regressivity argument hindered increases in tobacco taxation in Armenia. First, we pursued an extended cost-effectiveness analysis (ECEA) to assess the health, financial, and distributional consequences (by consumption quintile) of increases in the excise tax on cigarettes in Armenia. We simulated a hypothetical price hike leading to a tax rate of about 75% of the retail price of cigarettes, which would be fully passed on to consumers. Second, we conducted a series of stakeholder interviews to examine the importance of the regressivity argument and identify the factors that allowed tobacco tax increases to be adopted as public policy in Armenia. We show that increased excise taxes would bring large health and financial benefits to Armenian households. Half of tobacco-related premature deaths and 27% of associated poverty cases averted would be concentrated among the bottom 40% of the population. Though regressivity was raised as a concern at the initial stages of the policy adoption process, our qualitative stakeholder analysis indicates that the recent accession to the Eurasian Economic Union and the fiscal constraints faced by the government created a window of opportunity for tobacco taxation to be placed on the policy agenda and adopted as government policy, and the ECEA findings were an important input into the process. -
Publication
The Poverty Implications of Alternative Tax Reforms: Results from a Numerical Application to Pakistan
(Elsevier, 2017-10)This paper presents results from four simulations of the impact of potential tax reforms in Pakistan on poverty, shared prosperity, and inequality. The simulations are carried out in the context of a dynamic computational general equilibrium (CGE) model that incorporates endogenous tax evasion. The simulations link the CGE model to household survey data that is incorporated in a micro simulation model. The combined models suggest that equal yield increases in sales and corporate tax rates differ mildly in their impacts on consumption and poverty. Endogenously modeled tax evasion plays an important role in the results. -
Publication
No Condition Is Permanent: Middle Class in Nigeria in the Last Decade
(Taylor and Francis, 2017-09-21)The economic debate on the existence and definition of the middle class has become particularly lively in many developing countries. Building on a recently developed framework called the Vulnerability Approach to Middle Class (VAMC) to define the middle class, this paper tries to estimate the size of the Nigerian middle class in a rigorous quantitative manner and to gauge its evolution over time. Using the VAMC method, the middle class group can be defined residually from the vulnerability analysis as those for which the probability of falling into poverty is below a certain threshold. The results show that there has been considerable improvement in the size of the Nigerian middle class from 13 per cent in 2003/4 to 19 per cent in 2012/13. However, the rate has been slower than expected given the high growth rates experienced in the country over the same period. The results also paint a heterogeneous picture of the middle class in Nigeria with large spatial differences. The southern regions have a higher share and experienced more growth of the middle class compared with the northern regions. -
Publication
Poverty and Shared Prosperity: Let's Move the Discussion Beyond Growth
(Taylor and Francis, 2017-05-02)Some authors argue that it is enough to focus on growth to achieve lower poverty and greater shared prosperity. Policy-makers are warned that any effort to make growth more equal would be a distraction at best and could even be detrimental. Achieving the World Bank target of a 3% poverty rate by 2030 will require, however, more targeted policies favoring the poorest segments of the population. But what would be these policies? While studies investigating determinants of GDP growth have been numerous, less is known about factors influencing household incomes at the lowest segments of the income distribution. This paper estimates income drivers for the poorest two income quintiles drawing on a panel of 117 countries over the period 1967–2011. Its results suggest that maintaining macroeconomic stability as well as investing in human and physical capital would not only be associated with faster overall economic growth, but also with even faster income growth for the poorest segments of the population. This paper confirms the central role overall economic growth should play in any strategy to reduce poverty. Its results suggest, however, that in addition policy-makers may have instruments to tweak the distribution of the benefits of faster economic growth in favor of the households at the bottom of the income distribution. There thus need not be a trade-off between inequality and growth. -
Publication
Does Inequality Drive the Dutch Disease?: Theory and Evidence
(Elsevier, 2017-05)In this paper we show that the Dutch disease can arise solely from inequality in the distribution of natural resource rents. Given two otherwise identical countries that differ only in the ownership shares of the natural resource rents, the country with the less equal distribution will have less production of manufacturing goods and less development of learning-by-doing in this sector. As opposed to conventional models, where income distribution has no effect on economic outcomes, an unequal distribution of the resource wealth can generate the Dutch disease dynamics even in countries with an initial comparative advantage in manufacturing. We also provide a range of empirical tests of our model, including both difference and system GMM estimators in a dynamic panel. To disentangle the effects of inequality and institutional quality we purge our inequality measure of any linear or higher order correlations with institutional quality and repeat our system and difference GMM estimations. Our empirical analysis supports the hypothesis that inequality indeed plays a significant role in whether being resource-rich is a blessing or a curse for a country. The more unequal is the distribution of natural resource rents, the stronger is the disease. -
Publication
Finance, Growth and Shared Prosperity: Beyond Credit Deepening
(Elsevier, 2016-06-09)Finance might help mobilize greater resources for investment, improve allocation efficiency, and boost economic growth, but since the global economic crisis this relationship has come under increased skepticism. Particularly, the often used indicator of financial depth—private credit to GDP—has been questioned as a robust and reliable contributor to economic growth. Moreover, little research has been undertaken on the broader income distribution effects of finance and economic growth. This paper builds on the literature examining the relationship between finance and growth, inequality, and poverty. It investigates how financial development, broadly defined to include depth, efficiency, stability, and inclusion, influence the growth of aggregate income and the income of people in the bottom 40 percent of the income distribution (B40). It also examines how these relationships vary through banking crises. A key contribution of this study is to empirically unpack the multiple effects of financial development on growth across different income groups and finds, interestingly, that firm inclusion is perhaps the most important contributor to B40 long-run income growth. -
Publication
Growth Still Is Good for the Poor
(Elsevier, 2015-06-18)Average incomes in the poorest two quintiles on average increase at the same rate as overall average incomes. This is because, in a global data set spanning 121 countries over the past four decades, changes in the share of income of the poorest quintiles are uncorrelated with changes in average income. The variation in changes in quintile shares is also small relative to the variation in growth in average incomes, implying that the latter accounts for most of the variation in income growth in the poorest quintiles. In addition, we find little evidence that changes in the bottom quintile shares are correlated with country-level factors that are typically considered as important determinants for growth in average incomes or for changes in inequality. This evidence confirms the central importance of economic growth for improvements in living standards at the low end of the income distribution. It also illustrates the difficulty of identifying specific macroeconomic policies that are significantly associated with the growth rates of those in the poorest quintiles relative to everyone else.