Journal Issue: World Bank Research Observer, Volume 23, Issue 2

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The Growing Phenomenon of Private Tutoring
(World Bank, 2008-09-01) Dang, Hai-Anh ; Rogers, F. Halsey
Does private tutoring increase parental choice and improve student achievement, or does it exacerbate social inequalities and impose heavy costs on households, possibly without improving student outcomes? Private tutoring is now a major component of the education sector in many developing countries, yet education policy too seldom acknowledges or makes use of it. This survey of the literature examines the extent of private tutoring, identifies the factors that explain its growth, and analyzes its cost-effectiveness in improving student academic performance. It also presents a framework for assessing the efficiency and equity effects of tutoring. The results suggest that even taking equity concerns into account, tutoring can raise the effectiveness of the education system under certain reasonable assumptions. Guidance is offered for attacking corruption and other problems that diminish the benefits of private tutoring.
Collecting the Pieces of the FDI Knowledge Spillovers Puzzle
(World Bank, 2008-09-01) Smeets, Roger
Recent surveys of the empirical literature have concluded that the evidence is mixed on the magnitude, direction, and even existence of knowledge spillovers from foreign direct investment (FDI). This article reviews the recent theoretical and empirical literature that responds to these inconclusive results and considers three main issues: spillover channels, mediating factors, and FDI heterogeneity. Studies that take into account individual spillover channels find robust evidence of knowledge spillovers from FDI. Studies on the importance of mediating factors and FDI heterogeneity are less conclusive and could benefit from greater convergence in methodologies and greater specificity in the spillover channels of interest. More generally, many studies do not properly distinguish between knowledge spillovers and knowledge transfers, and empirical studies seem to greatly outnumber theoretical studies.
Can Biological Factors Like Hepatitis B Explain the Bulk of Gender Imbalance in China? A Review of the Evidence
(World Bank, 2008-09-01) Gupta, Monica Das
A recent study challenges the assumption that the large deficit of girls in East and South Asia reflects the preference for sons, suggesting that much of the deficit—as much as 75 percent in China—is attributable to hepatitis B (HBV). The claim is inconsistent with the results of a study based on a large medical data set from Taiwan (China), which indicates that HBV infection raises a woman's probability of having a son by only 0.25 percent. In addition, demographic data from China show that the only group of women who have elevated probabilities of bearing sons are those who have already borne daughters. This pattern makes it difficult to see how any biological factor can explain a large part of the imbalance in China's sex ratios at birth, unless it can be shown that it somehow selectively affects those who have borne girls or causes them to first bear girls and then boys. The Taiwanese example suggests that this is not the case with HBV, the impact of which is unaffected by the sex composition of previous births. The data thus support the cultural rather than the biological explanation for gender imbalance.
Can Survey Evidence Shed Light on Spillovers from Foreign Direct Investment?
(World Bank, 2008-09-01) Javorcik, Beata S.
Although some economists remain skeptical of the existence of positive externalities associated with foreign direct investment (FDI), many countries spend large sums attracting foreign investors in the hope of benefiting from knowledge spillovers. Data collected through enterprise surveys conducted in the Czech Republic and Latvia suggest that the entry of multinationals affects domestic enterprises in the same industry or in upstream or downstream sectors through multiple channels. Some of these channels represent true knowledge spillovers while others have positive or negative effects on domestic producers in other ways. The relative magnitudes of these channels depend on host country conditions and the type of FDI inflows, which explains the seemingly inconsistent findings of the literature. The focus of the debate should shift from attempting to generalize about whether or not FDI leads to productivity spillovers to determining under what conditions it can do so.
Industrial Location in Developing Countries
(World Bank, 2008-09-01) Deichmann, Uwe ; Lall, Somik V. ; Redding, Stephen J. ; Venables, Anthony J.
Despite a diminishing role in industrial countries, the manufacturing sector continues to be an engine of economic growth in most developing countries. This article surveys the evidence on the determinants of industry location in developing countries. It also employs micro data for India and Indonesia to illustrate recent spatial dynamics of manufacturing relocation within urban agglomerations. Both theory and empirical evidence suggest that agglomeration benefits, market access, and infrastructure endowments in large cities outweigh the costs of congestion, higher wages, and land prices. Despite this evidence, many countries have tried to encourage industrial firms to locate in secondary cities or other lagging areas. Cross-country evidence suggests that fiscal incentives to do so rarely succeed. They appear to influence business location decisions among comparable locations, but the result may be a negative-sum game between regions and inefficiently low tax rates, which prevent public goods from being funded at sufficiently high levels. Relocation tends to be within and between agglomerations rather than from large cities to smaller cities or lagging regions. Rather than provide subsidies and tax breaks, policymakers should focus on streamlining laws and regulations to make the business environment more attractive.