Journal Issue: World Bank Research Observer, Volume 16, Issue 2

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The Politics of Russian Enterprise Reform : Insiders, Local Governments, and the Obstacles to Restructuring
(World Bank, Washington, DC, 2001-10) Desai, Raj M. ; Goldberg, Itzhak
Russia and other countries in the commonwealth of independent states that have implemented voucher privatization programs have to account for the puzzling behavior of insiders manager-owners-who, in stripping assets from the firms they own, appear to be stealing from one pocket to fill the other. This article suggests that asset stripping and the absence of restructuring result from interactions between insiders and subnational governments in a particular property rights regime, in which the ability to realize value is limited by uncertainty and illiquidity. As the central institutions that govern the Russian economy have ceded their powers to the provinces, regional and local governments have imposed a variety of distortions on enterprises to protect local employment. To disentangle these vicious circles of control, this article considers three sets of institutional changes: adjustments to the system of fiscal federalism by which subnational governments would be allowed to retain tax revenues generated locally; legal improvements in the protection of property rights; and the provision of mechanisms for restructuring and ownership transformation in insider-dominated firms. The aim of these reforms would be to change the incentives that local governments, owners, and investors face; to convince subnational governments that a more sustainable way of protecting employment lies in protecting local investment; to raise the cost of theft and corruption by insiders and local officials; and to allow investors to acquire controlling stakes in viable firms.
The World Bank Research Observer 16(2)
(Cary, NC: Oxford University Press and the World Bank, 2001-09) World Bank ; Devarajan, Shantayanan
Counting the world's poor: problems and possible solutions; by Angus Deaton. Comments on "counting the world's poor"; by Martin Ravallion, and T. N. Srinivasan. Ecology, history, and development : a perspective from rural Southeast Asia; by Yujiro Hayami. Productivity growth and sustainability in post-green revolution agriculture: the case of the Indian and Pakistan Punjab; by Rinku Murgai, Mubarik Ali, and Derek Byerlee. The politics of Russian enterprise reform: insiders, local governments, and the obstacles to restructuring; by Raj M. Desai and Itzhak Goldberg.
Comment on 'Counting the World's Poor' by Angus Deaton
(Washington, DC: World Bank, 2001-10) Srinivasan, T.N.
Deaton s analysis of the problems with poverty counts and suggestions for improvement, including issues needing further research, are based on two distinct stages in counting the poor. At the first or international stage, a world poverty line is set and used to derive comparable poverty lines for each country. At the second or domestic stage, the poverty lines are used to count the number of poor people in each country, and the others are added up over countries. He finds disquieting evidence about both stages of counting. The data for poverty counts in the second stage come from household surveys, whereas data on aggregate economic growth are from National Accounts Statistics (NAS). Deaton finds that in many countries there are large and growing disparities between survey data and national accounts so that there is no consistent empirical basis for conclusions about the extent to which growth reduces poverty. It is scandalous that even after nearly half a century of pursuing national and international programs for the eradication of mass poverty, the empirical foundations for assessing the success or failure of the programs and drawing lessons from them are so weak as to be deemed nonexistent. Abandoning them and focusing on national and subnational poverty analysis that goes beyond headcounts will be the sensible course to follow. The author focuses only on consumption-based poverty lines. The reason is the challenge of defining household income in a theoretically satisfactory manner and collecting data on income based on that definition through household surveys in any country (developed or developing). Deaton (1989) discusses the difficulties in meeting the challenge. Poverty counts based on income-based poverty lines are even more problematic than consumption-based ones.
Productivity Growth and Sustainability in Post-Green Revolution Agriculture : The Case of the Indian and Pakistan Punjabs
(Washington, DC: World Bank, 2001-10) Murgai, Rinku ; Ali, Mubarik ; Byerlee, Derek
This article attempts to determine the long-term productivity and sustainability of irrigated agriculture in the Indian and Pakistan Punjabs by measuring trends in total factor productivity for production systems in both states since the advent of the green revolution. These measurements over time and across systems have resulted in three major findings. First, there were wide spatial and temporal variations between the two Punjabs. Although output growth and crop yields were much higher in the Indian Punjab, productivity growth was higher by only a small margin. Moreover, the lowest growth in productivity took place during the initial green revolution period and in the wheat-rice system in both states. The time lag between adoption of green revolution technologies and realization of productivity gains is related to learning induced efficiency gains, better utilization of capital investments over time, and problems with the standard methods of productivity measurement that downwardly bias estimate, particularly during the green revolution period. Second, input growth accounted for most of the output growth in both Punjabs during the period under study. Third, intensification, especially in the wheat-rice system, resulted in resource degradation in both Punjabs. Data from Pakistan show that resource degradation reduced overall productivity growth from technical change and from education and infrastructure investment by one-third.
Counting the World's Poor : Problems and Possible Solutions
(Washington, DC: World Bank, 2001-10) Deaton, Angus
As recent discussions have made clear, the apparent lack of poverty reduction in the face of historically high rates of economic growth-both in the world as a whole and in specific countries (most notably India)-provides fuel for the argument that economic growth does little to reduce poverty. How confident can we be that the data actually support these inferences? At the international level, the regular revision of purchasing power parity exchange rates plays havoc with the poverty estimates, changing them in ways that have little or nothing to do with the actual experience of the poor. At the domestic level, the problems in measuring poverty are important not only for the world count but also for tracking income poverty within individual countries. Yet, in many countries, there are large and growing discrepancies between the survey data-the source of poverty counts-and the national accounts-the source of the measure of economic growth. Thus economic growth, as measured, has at best a weak relationship with poverty, as measured.
Comment on 'Counting the World's Poor' by Angus Deaton
(Washington, DC: World Bank, 2001-10) Ravallion, Martin
This issue provides a usefully critical discussion of the current methods used by the World Bank for measuring poverty. The author will not address all the points raised by Deaton- avoiding those on which the author thinks there is broad agreement that the World Bank s current methods can be improved. These include the way that (invariably troublesome) income surveys are handled, the scope for better use of subjective-qualitative welfare data, and the need to better acknowledge the limitations of welfare metrics based solely on consumption of market goods. This leaves two main issues that are very important for global poverty measurements- namely, how currency conversions are done and whether the poverty measures should be anchored to the national accounts. On both counts, Deaton makes recommendations for changing current methods. Before considering his recommendations, the author will briefly describe how the World Bank measures poverty.
Ecology, History, and Development : A Perspective from Rural Southeast Asia
(Washington, DC: World Bank, 2001-10) Hayami, Yujiro
The process by which different ecological conditions and historical trajectories interacted to create different social and cultural systems resulted in major differences in economic development performance within Southeast Asia. In the late 19th century, Indonesia, the Philippines, and Thailand commonly experienced vent-for-surplus development through exploitation of unused lands. Nevertheless, different agrarian structures were created. Indonesia s development was mainly based on the exploitation of tropical rain forest under Dutch colonialism. It resulted in the bifurcation of the rural sector between rice-farming peasant proprietors and large plantations for tropical export crops based on hired labor. In the Philippines, exploitation of the same resource base under Spanish rule resulted in pervasive landlessness among the rural population. Relatively homogeneous landowning peasants continued to dominate in Thailand, where delta plains that were suitable only for rice production formed the resource base for development. These different agrarian structures associated with different social value systems have accounted for differential development performance across the three economies in the recent three decades.