Journal Issue: World Bank Economic Review, Volume 29, Issue 1
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Volume
29
Number
1
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Journal ISSN
1564-698X
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World Bank Economic Review
1564-698X
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Articles
(Ineffective) Messages to Encourage Recycling
(Oxford University Press on behalf of the World Bank, 2015-01) Karlan, Dean; Chong, Alberto; Shapiro, Jeremy; Zinman, Jonathan
There is growing interest in using messaging to drive prosocial behaviors, which contribute to investment in public goods. We worked with a leading nongovernmental organization in Peru to randomize nine different prorecycling messages that were crafted on the basis of best practices, prior evidence, and theories of behavioral change. Different variants emphasized information on environmental or social benefits, social comparisons, social sanctions, authority, and reminders. None of the messages had significant effects on recycling behavior. However, reducing the cost of ongoing participation by providing a recycling bin significantly increased recycling among enrolled households.
Powering Up Developing Countries through Integration?
(Oxford University Press on behalf of the World Bank, 2015-01) Auriol, Emmanuelle; Biancini, Sara
Power market integration is analyzed in a two-country model with nationally regulated firms and costly public funds. If the generation costs between the two countries are too similar, negative business stealing outweighs efficiency gains so that, subsequent to integration, welfare decreases in both regions. Integration is welfare enhancing when the cost difference between two regions is large enough. The benefits from export profits increase the total welfare in the exporting country, whereas the importing country benefits from a lower price. In this case, market integration also improves incentives to invest compared to autarchy. The investment levels remain inefficient, however, especially for transportation facilities. Free riding reduces incentives to invest in these public-good components of the network, whereas business stealing tends to decrease the capacity to finance new investment.
Global Supply Chains and Trade Policy Responses to the 2008 Crisis
(Oxford University Press on behalf of the World Bank, 2015-01) Gawande, Kishore; Hoekman, Bernard; Cui, Yue
The collapse in trade and the contraction of output that occurred during 2008–9 was comparable to, and in many countries more severe than, the Great Depression of the 1930s. However, it did not give rise to the rampant protectionism that followed the Great Crash. The idea that the rise in the fragmentation of production across global value chains – vertical specialization – may be a deterrent against protectionism is underappreciated in the literature. Institutions also played a role in limiting the extent of protectionist responses. World Trade Organization discipline raises the cost of using trade policies for member countries and has proved to be a stable foundation for the open multilateral trading system that has been built over the past 50 years. Using trade and protection data for seven large emerging market countries that have a history of active use of trade policy, the influence of these and other factors on trade policy responses to the 2008 crisis are empirically examined. An instrumental variables strategy is used to identify their impact. Participation in global value chains is found to be a powerful economic factor determining trade policy responses.
Development at the Border
(Oxford University Press on behalf of the World Bank, 2015-01) Cogneau, Denis; Mesplé-Somps, Sandrine; Spielvogel, Gilles
By applying regression discontinuity designs to a set of household surveys from the 1980–90s, we examine whether Côte d'Ivoire's aggregate wealth was translated at the borders of neighboring countries. At the border of Ghana and at the end of the 1980s, large discontinuities are detected for consumption, child stunting, and access to electricity and safe water. Border discontinuities in consumption can be explained by differences in cash crop policies (cocoa and coffee). When these policies converged in the 1990s, the only differences that persisted were those in rural facilities. In the North, cash crop (cotton) income again made a difference for consumption and nutrition (the case of Mali). On the one hand, large differences in welfare can hold at the borders dividing African countries despite their assumed porosity. On the other hand, border discontinuities seem to reflect the impact of reversible public policies rather than intangible institutional traits.
Optimal Food Price Stabilization in a Small Open Developing Country
(Oxford University Press on behalf of the World Bank, 2015-01) Gouel, Christophe; Jean, Sébastien
This paper analyzes the use of storage and trade policies to achieve food price stabilization in a small open developing country. Optimal stabilization policies are identified using a rational expectations storage model with risk-averse consumers and incomplete markets. Without public intervention, price dynamics are driven by domestic productive shocks and international prices. On its own, an optimal storage policy is found to be detrimental to consumers because its stabilizing benefits leak to the world market. In contrast, an optimal combination of storage and trade policies results in a powerful stabilization of domestic food prices. However, such an optimal combination is shown to entail two serious drawbacks: its distributive impacts are large compared to its efficiency benefits, and by distorting excess supply curves, it may aggravate high world price episodes.
Fiscal Responses after Catastrophes and the Enabling Role of Financial Development
(Oxford University Press on behalf of the World Bank, 2015-01) Raddatz, Claudio; Melecky, Martin
Natural disasters may constitute a major shock to public finances and debt sustainability because of their impact on output and the need for government response with reconstruction and relief expenses. The question arises of whether governments can use financial development policy as the means to mitigate or insure against this negative fiscal impact. This paper uses a panel vector autoregressive model, estimated on annual data for high- and middle-income countries over 1975–2008, to study the role of debt market development and insurance penetration in enabling fiscal response after catastrophes. The authors find that countries with higher debt market development suffer smaller real consequences from disasters but that their deficits expand further following the mitigating fiscal response. Disasters in countries with high insurance penetration also experience smaller real consequences of disasters but without the need for further deficit expansions. From an ex-post perspective, the availability of insurance could offer the best mitigation approach against the real and fiscal consequences of disasters.
Chinese Firms' Entry to Export Markets
(Oxford University Press on behalf of the World Bank, 2015-01) Mayneris, Florian; Poncet, Sandra
In this paper, the effect of proximity to multinational exporters on the creation of new export linkages (the extensive margin of trade) is debated. Using panel data from Chinese customs for 1997-2007, the capacity for Chinese domestic firms to begin exporting new varieties to new markets is shown to respond positively to the export activity of neighboring foreign firms. These spillovers are shown to be product and country specific. This conclusion is robust to fixed effects and instrumental variable specifications that control for both supply and demand shocks that could bias the estimations. The impact is sizable. The marginal impact of product-country-specific foreign export spillovers is five times as large as the effect of a 10 percent increase in the demand for the product in the destination country. Foreign export spillovers are also shown to be primarily limited to ordinary trade activities. Overall, our findings suggest that even for a country with an important cost-advantage such as China, there is room for initiatives from policy-makers that will diffuse best practices regarding export experience among exporters.