Journal Issue: World Bank Economic Review, Volume 38, Issue 1
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Volume
38
Number
1
Issue Date
2024-02
Journal Title
Journal ISSN
1564-698X
Journal
World Bank Economic Review
1564-698X
Journal Volume
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Articles
Infrastructure Quality and FDI Inflows
(Published by Oxford University Press on behalf of the World Bank, 2023-08-10) Mensah, Justice Tei; Traore, Nouhoum
Does ambient infrastructural quality
affect foreign direct investment (FDI) in developing
countries This paper investigates how the arrival of
high-speed internet in Africa triggered FDI into the region.
It also explores the role of complementary infrastructure,
such as access to electricity and road connectivity, in
amplifying the impact of internet connectivity on
investment. To causally estimate impacts, the paper exploits
plausibly exogenous variations in access to high-speed
internet induced by the staggered arrival of submarine
fiber-optic internet cables and spatial variations in
terrestrial fiber cable networks across locations on the
continent. Findings from the paper indicate that access to
high-speed internet induces FDI, particularly in the service
sector, with the finance, technology, retail, and health
services subsectors as the main beneficiaries. Access to
(hard) infrastructure, such as electricity and roads,
amplifies the impact of internet connectivity on FDI, thus
highlighting the role of complementarities in the impact of
infrastructure. Further, the results suggest that
improvement in quality of governance and increased
performance of incumbent firms are plausible mechanisms.
Import Uncertainty and Export Dynamics
(Published by Oxford University Press on behalf of the World Bank, 2023-12-18) Vijil, Mariana; Wagner, Laurent; Woldemichael, Martha Tesfaye
A supply chain is only as strong as
its weakest link. Firms are constantly managing
uncertainties, including unexpected delays in the provision
of a critical input that can slow down or halt the
production process, possibly making the manufacturer miss a
delivery deadline. As most exporters are also importers of
intermediate goods, supply chain unreliability related to
import processing times at the border could impact
downstream export dynamics. The role of unpredictability in
border-clearance times for imports in manufacturing firms’
entry, exit, and survival in export markets is investigated
using the PPML estimator on a rich dataset built on firm
level information for 48 developing countries over
2006–2014. Uncertainty in the time to clear imported inputs
impacts neither the entry nor the exit rate, but translates
into lower survival rates for new exporters, reducing the
number of firms that continue serving the foreign market
beyond their first year of entry. This effect grows larger
over time, owing to rising reputational costs to
input-importing exporters and is mainly driven by
South-North trade, possibly reflecting the time-sensitivity
of buyers in developed countries. Results also reveal
heterogeneous effects across export industries, and the
mediating role of sunk costs of entry in foreign markets,
which attenuate the negative effect of uncertainty on
survival rates as firms delay exiting the export market.
Employment Mismatches Drive Expectational Earnings Errors among Mozambican Graduates
(Published by Oxford University Press on behalf of the World Bank, 2023-07-27) Jones, Sam; Santos, Ricardo; Xirinda, Gimelgo
Biased beliefs about future
labor-market earnings are commonplace. Based on a
longitudinal survey of graduate work transitions in
Mozambique, this study assesses the contribution of
employment mismatches to a large positive gap between
expected (ex-ante) and realized (ex post) earnings.
Accounting for the simultaneous determination of pecuniary
and non-pecuniary work characteristics, employment
mismatches are found to be material and associated with
large earnings penalties. A decomposition of these
expectational errors shows that around two-thirds are
attributable to employment mismatches, suggesting job
seekers systematically overestimate the ease of securing
good jobs.
Public Pre-Primary and Maternal Employment in Algeria
(Published by Oxford University Press on behalf of the World Bank, 2023-08-14) Krafft, Caroline; Lassassi, Moundir
Globally, employment rates of women
remain substantially below those of men. Since women
disproportionately care for children, policies that offer
care alternatives or lower the cost of care, should,
theoretically, increase women’s employment. This paper tests
whether public pre-primary education can increase women’s
employment, using a natural experiment in Algeria. Education
reforms in Algeria substantially expanded public preprimary,
targeting children aged five. The paper uses data from 2006
(early in the expansion), 2012, and 2018 (after pre-primary
had substantially expanded). The analyses use a
discontinuity in whether children are eligible for
pre-primary, based on their birthdates, to identify the
effect of pre-primary on women’s employment. Increased
pre-primary education did not increase and may have actually
decreased women’s employment. One potential explanation for
these findings is the half-day schedule of pre-primary may
be difficult to reconcile with employment. Negative effects
are concentrated among women living in nuclear families, who
lack alternative caregivers.
Shifting Attitudes towards Domestic Violence
(Published by Oxford University Press on behalf of the World Bank, 2023-12-01) Deschênes, Sarah; Hotte, Rozenn
The paper examines the effect of a
primary education program in Benin on women’s marital
outcomes. The study leverages a sharp increase in the
construction of schools in the 1990s to assess the causal
impact of an increase in primary-school supply on
primary-school attendance, employment, marital outcomes, and
experience and tolerance of intimate partner violence (IPV).
Using quasi-experimental geographical and historical
variations in the number of schools built, the results
indicate that in rural areas the school building program
increased the probability of attending primary school and
increased the age at marriage and at first child. It
decreased the probability that women find domestic violence
justified and that they experience emotional IPV. The
effects are driven by women’s own increase in education
rather than their husbands.
Raising the Age of Marriage Entry and Child’s Nutrition Intake? Evidence from the Reform of Ethiopia’s Family Law
(Published by Oxford University Press on behalf of the World Bank, 2023-08-29) Efobi, Uchenna
This study investigates the impact of
a family law reform in Ethiopia that raises the age of
marriage entry for females (among other aspects of the law)
on the nutritional intake of the children of affected women.
Using the difference-in-differences and event-study
strategies, the result suggests that exposure to the reform
led to a significant increase in dietary diversity (14
percent increase relative to the mean) and a significant
increase in the likelihood of consuming fruits and
vegetables, fruits and vegetables rich in vitamin A, green
leafy vegetables, and animal-source foods. The effect does
not appear to be due to changes in women’s economic
engagement, such as their agency and outside options.
Instead, it seems to imply that the implementation of the
reform affects women’s social status in terms of their
decision-making power over sexual and marital relations.
C-Sections, Obesity, and Healthcare Specialization
(Published by Oxford University Press on behalf of the World Bank, 2023-09-01) Herrera-Almanza, Catalina; Marquez-Padilla, Fernanda; Prina, Silvia
This study explores whether hospitals
with higher increases in obesity levels have higher cesarean
section (CS) rates and the consequential effects on maternal
and newborn health in Mexico for 2008–2015. It models how
changes in the obesity level of hospitals’ patient pools may
affect the quantity and quality of care by focusing on the
use of CS and the potential returns to specialization. And
it creates a measure of hospital-level obesity, based on the
fraction of obesity-related discharges for women of
childbearing age. Exploiting temporal and hospital variation
of this measure, results show that higher hospital-level
obesity increases a woman’s probability of having a CS.
Also, delivery-related birth outcomes improve: maternal
mortality, birth injuries, and birth trauma decrease. The
evidence is consistent with hospital-level specialization in
CS leading to better birth outcomes.
Labor Market and Macroeconomic Dynamics in Latin America amid COVID
(Published by Oxford University Press on behalf of the World Bank, 2023-12-01) Finkelstein Shapiro, Alan; Nuguer, Victoria; Novoa Gomez, Santiago
This paper analyzes how a policy that
lowers firm digital-adoption costs shapes the labor-market
and economic recovery from COVID-19 in Latin America (LA)
using a framework with firm entry and unemployment, where
salaried firms can adopt digital technologies and the
employment and firm structure embodies key features of LA
economies. Using Mexico as a case study, the model
replicates the response of the labor market and output at
the onset of the COVID recession and in its aftermath,
including the dynamics of labor-force participation and
informal employment. A policy-induced permanent reduction in
the cost of adopting digital technologies at the trough of
the recession bolsters the recovery of GDP, total
employment, and labor income, and leads to a larger
expansion in the share of formal employment compared to a
no-policy scenario. In the long run, the economy exhibits a
reduction in total employment but higher levels of GDP and
labor income, greater average firm productivity, a larger
formal employment share, and a marginally lower unemployment
rate. Finally, as a side effect, the policy exacerbates the
differential between formal and informal labor income, both
as the economy recovers from the COVID recession and in the
long run.
Filling the "Decency Gap"? Donors’ Reaction to US Policy on International Family Planning Aid
(Published by Oxford University Press on behalf of the World Bank, 2023-09-21) Ferrière, Nathalie
The impact of US allocation of family
planning aid on other donors is studied to gain new insights
into donor interactions. Within this context, the dominant
player in the sector is the United States, whose policies on
family planning undergo changes influenced by domestic
debates surrounding abortion. By utilizing the Mexico City
Policy and considering exposure to this policy as an
instrumental factor, it has been observed that other donors
do not immediately react to policy changes made by the
United States, either contemporaneously or within one year.
However, a noticeable shift occurs after a two-year period,
indicating that these donors eventually align their
allocation strategies with those of the United States.
Further analysis of this phenomenon reveals varying patterns
among different types of donors. While smaller donors
exhibit a clear intention to compensate for US policy
changes, larger donors display a mix of competitive
tendencies and herding behavior, thereby reinforcing the
impact of the Mexico City Policy after the two-year time frame.