Journal Issue: World Bank Economic Review, Volume 33, Issue 1
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Volume
33
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
What Drives Local Food Prices? Evidence from the Tanzanian Maize Market
(Published by Oxford University Press on behalf of the World Bank, 2019-02) Baffes, John; Mitchell, Donald
We examine the drivers of monthly changes in maize prices across 18 Tanzanian markets. Local prices respond three to four times faster to the main regional market (Nairobi) than to the international benchmark (US Gulf). More importantly, shocks from Nairobi account for only one third of the explained variation in domestic prices; the remaining two-thirds is accounted for by domestic influences (including harvest cycles, weather shocks, and trade policies). Further, we show that remoteness and the local agroecology systematically influence the behavior of food prices.
Financial Constraints and Girls’ Secondary Education
(Published by Oxford University Press on behalf of the World Bank, 2019-02) Blimpo, Moussa P.; Pugatch, Todd
We assess the impact of large-scale fee elimination for secondary school girls in The Gambia on the quantity, composition, and achievement of students. The gradual rollout of the program across geographic regions provides identifying variation in the policy. The program increased the number of girls taking the high school exit exam by 55%. The share of older test takers increased in poorer districts, expanding access for students who began school late, repeated grades, or whose studies had been interrupted. Despite these changes in the quantity and composition of students, we find robustly positive point estimates of the program on test scores, with suggestive evidence of gains for several subgroups of both girls and boys. Absence of learning declines is notable in a setting where expanded access could strain limited resources and reduce school quality. Our findings suggest that financial constraints remain serious barriers to post-primary education, and that efforts to expand access to secondary education need not come at the expense of learning in low-income countries like The Gambia.
Agriculture, Aid, and Economic Growth in Africa
(Published by Oxford University Press on behalf of the World Bank, 2019-02) McArthur, John W.; Sachs, Jeffrey D.
How can foreign aid to agriculture support economic growth in Africa? This paper constructs a geographically indexed applied general equilibrium model that considers pathways through which aid might affect growth and structural transformation of labor markets in the context of soil nutrient variation, minimum subsistence consumption requirements, domestic transport costs, labor mobility, and constraints to self-financing of agricultural inputs. Using plausible parameters, the model is presented for Uganda as an illustrative case. We present three stylized scenarios to demonstrate the potential economy-wide impacts of both soil nutrient loss and replenishment, and how foreign aid can be targeted to support agricultural inputs that boost rural productivity and shift labor to boost real wages. One simulation shows how a temporary program of targeted official development assistance (ODA) for agriculture could generate, contrary to traditional Dutch disease concerns, an expansion in the primary tradable sector and positive permanent productivity and welfare effects, leading to a steady decline in the need for complementary ODA for budget support.
Targeting Ultra-Poor Households in Honduras and Peru
(Published by Oxford University Press on behalf of the World Bank, 2019-02) Karlan, Dean; Thuysbaert, Bram
For policy purposes, it is important to understand the relative efficacy of various methods to target the poor. Recently, participatory methods have received particular attention. We examine the effectiveness of a hybrid two-step process that combines a participatory wealth ranking and a verification household survey, relative to two proxy means tests (the Progress out of Poverty Index and a housing index), in Honduras and Peru. The methods we examine perform similarly by various metrics. They all identify most accurately the poorest and the wealthiest households but perform with mixed results among households in the middle of the distribution. Ultimately, given similar performance, the analysis suggests that costs should be the driving consideration in choosing across methods.
Cofinancing in Environment and Development
(Published by Oxford University Press on behalf of the World Bank, 2019-02) Kotchen, Matthew J.; Negi, Neeraj Kumar
Leveraged cofinancing has emerged as a policy priority among international environment and development agencies. We study the determinants and impacts of cofinancing using a comprehensive data set from the GEF on 3,269 projects from 1991 through 2014, along with detailed ex post evaluations of more than 650 completed projects. We find that greater emphasis on cofinancing will tend to favor projects that are larger, less global in reach, focused on climate change, in countries with better governance, and led by certain multilateral development banks. A push towards more private sector involvement and loans, rather than grant financing, will tend to encourage projects with similar characteristics. Greater cofinancing results in better ex post evaluations, but projects executed by the private sector tend to achieve lower ratings. The results provide insight into how agencies can promote cofinancing and into how greater emphasis on cofinancing, private sector involvement, and nongrant instruments may implicitly shift environment and development priorities, as well as project outcomes.
Neighborhood Effects in Integrated Social Policies
(Published by Oxford University Press on behalf of the World Bank, 2019-02) Bobba, Matteo; Gignoux, Jeremie
When potential beneficiaries share their knowledge and attitudes about a policy intervention, their decision to participate and the effectiveness of both the policy and its evaluation may be influenced. This matters most notably in integrated social policies with several components. We examine spillover effects on take-up behaviors in the context of a conditional cash transfer program in rural Mexico. We exploit exogenous variations in the local frequency of beneficiaries generated by the program’s randomized evaluation. A higher treatment density in the areas surrounding the evaluation villages increases the take-up of scholarships and enrollment at the lower-secondary level. These cross-village spillovers operate exclusively within households receiving another component of the program, and do not carry over larger distances. While several tests reject heterogeneities in impact due to spatial variations in program implementation, we find evidence to suggest that spillovers stem partly from the sharing of information about the program among eligible households.
Re-evaluating Microfinance
(Published by Oxford University Press on behalf of the World Bank, 2019-02) Cintina, Inna; Love, Inessa
We evaluate effectiveness of microfinance using Propensity Score Matching (PSM) method applied to data collected in a recent randomized control trial. This method allows us to answer an additional set of questions not answered by the original study and provide more nuanced evidence by comparing Microfinance Institution (MFI) borrowers to those without any loans and those with prior loans from other sources. We argue that this unique setting with two comparison groups allows us to shed light on the unobservable entrepreneurial spirit bias and provides upper and lower bounds on the true microfinance impact. Our results suggest that microfinance can make a modest difference for some households in several expenditure categories.
Dynamics of Child Development
(Published by Oxford University Press on behalf of the World Bank, 2019-02) Galasso, Emanuela; Weber, Ann; Fernald, Lia C.H.
Longitudinal patterns of child development and socioeconomic status are described for a cohort of children in Madagascar surveyed when 3–6 and 7–10 years old. Substantial wealth gradients were found across multiple domains: receptive vocabulary, cognition, sustained attention, and working memory. The results are robust to the inclusion of lagged outcomes, maternal endowments, measures of child health, and home stimulation. Wealth gradients are significant at ages 3–4, widen with age, and flatten out by ages 9–10. For vocabulary and sustained attention, the gradient grows steadily between ages three and six; for cognitive composite and memory of phrases, the gradient widens later (ages 7–8) before flattening out. These gaps in cognitive outcomes translate into equally sizeable gaps in learning outcomes. 12–18% of the predicted gap in early outcomes is accounted for by differences in home stimulation, even after controlling for maternal education and endowments.
The Risk of Polygamy and Wives’ Saving Behavior
(Published by Oxford University Press on behalf of the World Bank, 2019-02) Boltz, Marie; Chort, Isabelle
In a polygamous society, all monogamous women are potentially at risk of polygamy. However, both the anthropological and economic literatures are silent on the potential impact of the risk of polygamy on economic decisions of monogamous wives. We explore this issue for Senegal using individual panel data. We first estimate a Cox model for the probability of transition to polygamy. Second, we estimate the impact of the predicted risk of polygamy on monogamous wives’ savings. We find a positive impact of the risk of polygamy on female savings entrusted to formal or informal institutions suggestive of self-protective strategies. This increase in savings comes at the cost of reduced consumption, both in terms of household food expenditures and wives’ private nonfood expenses.
'Sex in Marriage Is a Divine Gift'? Evidence on the Quantity-Quality Trade-off from the Manila Contraceptive Ban
(Published by Oxford University Press on behalf of the World Bank, 2019-02) Dumas, Christelle; Lefranc, Arnaud
We analyze the trade-off between child quantity and child quality in developing countries by estimating the effect of family size on child’s education in urban Philippines. To isolate exogenous changes in family size, we exploit a policy shock: in the late 1990s, the mayor of Manila enacted a municipal ban on modern contraceptives. Since other comparable cities in the Manila metropolitan area were not affected by the ban, this allows us to implement a difference-in-difference estimation of the effect on family size. We also exploit the fact that older mothers were less likely to become pregnant during the ban. Our results indicate that the contraceptive ban led to a significant increase in family size. They also provide evidence of a quality-quantity trade-off: increased family size led to a sizable decrease in educational attainment.
The Impact of the Arab Spring on the Tunisian Economy
(Published by Oxford University Press on behalf of the World Bank, 2019-02) Matta, Samer; Appleton, Simon; Bleaney, Michael
We use Synthetic Control Methodology to estimate the output loss in Tunisia as a result of the “Arab Spring.” Our results suggest that the loss was 5.5 percent, 5.1 percent, and 6.4 percent of GDP in 2011, 2012, and 2013 respectively. These findings are robust to a series of tests, including placebo tests, and are consistent with those from an Autoregressive Distributed Lag Model of Tunisia’s economic growth. Moreover, we find that investment was the main channel through which the economy was adversely impacted by the Arab Spring.
Optimal Climate Policy and the Future of World Economic Development
(Published by Oxford University Press on behalf of the World Bank, 2019-02) Budolfson, Mark; Dennig, Francis; Fleurbaey, Marc; Scovronick, Noah; Siebert, Asher; Spears, Dean; Wagner, Fabian
How much should the present generations sacrifice to reduce emissions today, in order to reduce the future harms of climate change? Within climate economics, debate on this question has been focused on so-called “ethical parameters” of social time preference and inequality aversion. We show that optimal climate policy similarly importantly depends on the future of the developing world. In particular, although global poverty is falling and the economic lives of the poor are improving worldwide, leading models of climate economics may be too optimistic about two central predictions: future population growth in poor countries, and future convergence in total factor productivity (TFP). We report results of small modifications to a standard model: under plausible scenarios for high future population growth (especially in sub-Saharan Africa) and for low future TFP convergence, we find that optimal near-term carbon taxes could be substantially larger.