Journal Issue: World Bank Economic Review, Volume 19, Issue 1
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Volume
19
Number
1
Issue Date
Journal Title
Journal ISSN
1564-698X
Journal
Journal
World Bank Economic Review
1564-698X
Journal Volume
Journal Volume
Other issues in this volume
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Articles
Publication
Measuring and Explaining the Impact of Productive Efficiency on Economic Development
(Published by Oxford University Press on behalf of the World Bank,
2005-01)
A limitation of most empirical
cross-country studies that focus on determinants of gross
domestic product (GDP) is that they fail to distinguish
explicitly between inputs used in production and conditions
that facilitate production. For example, physical capital,
human capital, and labor are production inputs, whereas the
quality of institutions, macroeconomic stability, and market
quality are conditions that facilitate production. This
article takes this distinction seriously and uses a
stochastic frontier approach to study factors affecting
economic performance. A panel data set of 71 countries for
the 1980-98 periods is used to estimate a production
frontier with physical capital, human capital, and labor as
inputs. The article also analyzes what drives productive
efficiency, using the institutional framework, macroeconomic
stability, market quality, and urbanization as possible
explanatory factors. Urbanization turns out to be an
important determinant, with the rule of law, inflation rate,
and market quality also affecting productive efficiency.
Publication
Financing Pharmaceutical Innovation : How Much Should Poor Countries Contribute?
(Published by Oxford University Press on behalf of the World Bank,
2005-01)
A public economics framework is used to
consider how pharmaceuticals should be priced when at least
some of the research and development incentive comes from
sales revenues. Familiar techniques of public finance are
used to relax some of the restrictions implied in the
standard use of Ramsey pricing. Under the more general
model, poor countries should not necessarily cover even
their own marginal costs, and the pricing structure is not
related to that which will be chosen by a monopolist in a
simple way. This framework is then used to examine ongoing
debates regarding the international patent system as
embodied in the world trade organization's agreement on
trade-related aspects of intellectual property rights.
Publication
Top Indian Incomes, 1922-2000
(Published by Oxford University Press on behalf of the World Bank,
2005-01)
This article presents data on the
evolution of top incomes and wages for 1922-2000 in India
using individual tax return data. The data show that the
shares of the top 0.01 percent, 0.1 percent, and 1 percent
in total income shrank substantially from the 1950s to the
early to mid-1980s but then rose again, so that today these
shares are only slightly below what they were in the 1920s
and 1930s. This U-shaped pattern is broadly consistent with
the evolution of economic policy in India: from the 1950s to
the early to mid-1980s was a period of
''socialist'' policies in India, whereas
the subsequent period, starting with the rise of Rajiv
Gandhi, saw a gradual shift toward more pro-business
policies. Although the initial share of the top income group
was small, the fact that the rich were getting richer had a
nontrivial impact on the overall income distribution.
Although the impact is not large enough to fully explain the
gap observed during the 1990s between average consumption
growths shown in National Sample Survey based data and the
national accounts based data, it is sufficiently large to
explain a non-negligible part of it.
Publication
Can We Discern the Effect of Globalization on Income Distribution? Evidence from Household Surveys
(Published by Oxford University Press on behalf of the World Bank,
2005-01)
New data derived directly from household
surveys are used to examine the effects of globalization on
income distribution in poor and rich countries. The article
looks at the impact of openness and of direct foreign
investment on relative income shares across the entire
income distribution. It finds strong evidence that at low
average income levels, the income share of the poor is
smaller in countries that are more open to trade. As
national income levels rise, the incomes of the poor and the
middle class rise relative to the income of the rich. The
article explains why using the trade to gross domestic
product (GDP) ratio in purchasing power parity terms, as
favored by some analysts, is inappropriate in studies of the
effect of trade on income distribution.
Publication
Prices and Unit Values in Poverty Measurement and Tax Reform Analysis
(Published by Oxford University Press on behalf of the World Bank,
2005-01)
Researchers often use unit values
(household expenditures on a commodity divided by the
quantity purchased) as proxies for market prices when
calculating poverty lines and estimating consumer demand
equations. Such proxies are often needed because community
price surveys in developing economies are either absent or
suffer quality problems. However, using unit values may
result in biases due to measurement error and quality
effects. In a household survey experiment, information on
prices was obtained in three ways: from unit values, from a
market price survey, and from the opinions of householders
who were shown pictures of items and asked to report the
local price. The three sets of price data are used to
calculate poverty lines, estimate price elasticities, and
analyze marginal tax reforms. There are substantial biases
when unit values are used as a proxy for market price, even
when sophisticated correction methods are applied.
Performance was better for the price opinions of household
members. The results highlight the importance of price
collection methods and the need to consider the wider costs
of having potentially unreliable community-level price data.
Publication
Has Distance Died? : Evidence from a Panel Gravity Model
(Published by Oxford University Press on behalf of the World Bank,
2005-01)
The estimated coefficient of distance on
the volume of trade is generally found to increase rather
than decrease through time using the traditional gravity
model of trade. This distance puzzle proved robust to
several ad hoc versions of the model using data for 1962-96
for a large sample of 130 countries. The introduction of an
augmented barrier to trade function removes the paradox,
yielding a decline in the estimate of the elasticity of
trade to distance of about 11 percent over the 35-year
period for the whole sample. However, the death of distance
is shown to be largely confined to bilateral trade between
rich countries, with poor countries becoming marginalized.