Journal Issue: World Bank Economic Review, Volume 15, Issue 3
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Volume
15
Number
3
Issue Date
Journal Title
Journal ISSN
1564-698X
Journal
World Bank Economic Review
1564-698X
Journal Volume
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Articles
Deposit Insurance around the World
(World Bank, Washington, DC, 2001-09) Sobaci, Tolga; Demirgüç-Kunt, Asli
In the past two decades, in a series of
banking crises around the world, banks have become
systematically insolvent. These crises have occurred in
developed and developing economies alike. To make such
financial system breakdowns less likely and to limit their
costs if they occur, policymakers feel the need for
financial safety nets. These include such policies as
implicit or explicit deposit insurance, a lender of last
resort function of the central bank, bank insolvency
resolution procedures, and bank regulation and supervision.
Of these policies, explicit deposit insurance has been
gaining popularity in recent years. Since the 1980s the
number of countries with explicit deposit insurance schemes
almost tripled, with most OECD countries and an increasing
number of developing economies adopting some form of
explicit depositor protection. In 1994 deposit insurance
became the standard for the newly created single banking
market of the European Union. Establishing an explicit
deposit insurance scheme became part of the generally
accepted best practice advice given to developing economies.
Capital Account Liberalization : What Do Cross-Country Studies Tell Us?
(World Bank, Washington, DC, 2001-09) Eichengreen, Barry
Capital account liberalization, it is
fair to say, remains one of the most controversial and least
understood policies of our day. One reason is that different
theoretical perspectives have very different implications
for the desirability of liberalizing capital flows. Another
is that empirical analysis has failed to yield conclusive
results. The answer, another influential strand of thought
contends, is that this efficient-markets paradigm is
fundamentally misleading when applied to capital flows.
Limits on capital movements are a distortion. It is an
implication of the theory of the second best that removing
one distortion need not be welfare enhancing when other
distortions are present.
Where Has All the Education Gone?
(Washington, DC: World Bank, 2001-09) Pritchett, Lant
Cross-national data show no association
between increases in human capital attributable to the
rising educational attainment of the labor force and the
rate of growth of output per worker. This implies that the
association of educational capital growth with conventional
measures of total factor production is large, strongly
statistically significant, and negative. These are 'on
average' results, derived from imposing a constant
coefficient. However, the development impact of education
varied widely across countries and has fallen short of
expectations for three possible reasons. First, the
institutional/governance environment could have been
sufficiently perverse that the accumulation of educational
capital lowered economic growth. Second, marginal returns to
education could have fallen rapidly as the supply of
educated labor expanded while demand remained stagnant.
Third, educational quality could have been so low that years
of schooling created no human capital. The extent and mix of
these three phenomena vary from country to country in
explaining the actual economic impact of education, or the
lack thereof.
Ownership and Growth
(Washington, DC: World Bank, 2001-09) Gylfason, Thorvaldur; Herbertsson, Tryggvi Thor; Zoega, Gylfi
This article suggests how state
enterprises can be incorporated into the theoretical and
empirical growth literature. Specifically, it shows that if
state enterprises are less efficient than private firms,
invest less, employ less skilled labor, and are less eager
to adopt new technology, then a large state enterprise
sector tends to be associated with slow economic growth, all
else remaining the same. The empirical evidence for 1978-92
indicates that, through a mixture of these channels, an
increase in the share of state enterprises in employment by
one standard deviation could reduce per capita growth by one
to two percentage points a year from one country to another.
Measuring the Dynamics Gains from Trade
(World Bank, Washington, DC, 2001-09) Wacziarg, Romain
This article investigates the links
between trade policy and economic growth in a panel of 57
countries between 1970 and 1989. It develops a new measure
of trade policy openness based on the policy component of
trade shares, using it in a simultaneous equations system to
identify the effect of trade policy on several determinants
of growth. The result suggests a positive impact of openness
on economic growth, with the accelerated accumulation of
physical capital accounting for more than half the total
effect; for smaller effects. This decomposition is robust
with respect to alternative specifications and time periods.
The article also successfully tests whether the model
exhaustively captures the effects of trade policy on growth.
Infrastructure, Geographical Disadvantage, Transport Costs, and Trade
(World Bank, Washington, DC, 2001-09) Limão, Nuno; Venables, Anthony J.
The authors use different data sets to
investigate the dependence of transport costs on geography
and infrastructure. Infrastructure is an important
determinant of transport costs, especially for landlocked
countries. Analysis of bilateral trade data confirms the
importance of infrastructure and gives an estimate of the
elasticity of trade flows with respect to the trade cost
factor of around-3. A deterioration of infrastructure from
the median to the 75th percentile raises transport costs by
12 percentage points and reduces trade volumes by 28
percent. Analysis of African trade flows indicates that
their relatively low level is largely due to poor infrastructure.