Journal Issue: World Bank Research Observer, Volume 26, Issue 1
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HIV Testing : Principles and Practice
(World Bank, 2011-07-02) Gersovitz, Mark
Testing is a potentially important intervention to slow the HIV epidemic in Africa and elsewhere. Some countries in Africa have achieved high levels of testing but most have not. Cost, price, and questions of confidentiality have limited the expansion of testing. It looks possible, however, that there are choices as to the design of testing programs that would expand the number of people who could know their HIV status in ways that would be worthwhile.
Adaptation amidst Prosperity and Adversity : Insights from Happiness Studies from around the World
(World Bank, 2011-07-02) Graham, Carol
Some individuals who are destitute report to be happy, while others who are very wealthy report to be miserable. There are many possible explanations for this paradox; the author focuses on the role of adaptation. Adaptation is the subject of much work in economics, but its definition is a psychological one. Adaptations are defense mechanisms; there are bad ones like paranoia, and healthy ones like humor, anticipation, and sublimation. Set point theory—which is the subject of much debate in psychology—posits that people can adapt to anything, such as bad health, divorce, and extreme poverty, and return to a natural level of cheerfulness. The author's research from around the world suggests that people are remarkably adaptable. Respondents in Afghanistan are as happy as Latin Americans and 20 percent more likely to smile in a day than Cubans. The findings suggest that while this may be a good thing from an individual psychological perspective, it may also shed insights into different development outcomes, including collective tolerance for bad equilibrium. The author provides examples from the economics, democracy, crime, corruption, and health arenas.
A Comparative Perspective on Poverty Reduction in Brazil, China, and India
(World Bank, 2011-07-02) Ravallion, Martin
Brazil, China, and India have seen falling poverty in their reform periods, but to varying degrees and for different reasons. History left China with favorable initial conditions for rapid poverty reduction through market-led economic growth; at the outset of the reform process there were many distortions to be removed and a relatively low inequality of access to the opportunities so created, though inequality has risen markedly since. By concentrating such opportunities in the hands of the better off, prior inequalities in various dimensions handicapped poverty reduction in both Brazil and India. Brazil's recent success in complementing market-oriented reforms with progressive social policies has helped it achieve a higher proportionate rate of poverty reduction than India, although Brazil has been less successful in terms of economic growth. In the wake of its steep rise in inequality, China might learn from Brazil's success with such policies. India needs to do more to assure that poor people are able to participate in both the country's growth process and its social policies; here there are lessons from both China and Brazil. All three countries have learned how important macroeconomic stability is to poverty reduction.
Corporate Governance and Performance around the World : What We Know and What We Don't
(World Bank, 2011-07-02) Love, Inessa
The author surveys a vast body of literature devoted to evaluating the relationship between corporate governance and performance as measured by valuation, operating performance, or stock returns. Most of the evidence to date suggests a positive association between corporate governance and various measures of performance. However, this line of research suffers from endogeneity problems that are difficult to resolve. There is no consensus yet on the nature of the endogeneity in governance–performance studies and in this survey the author proposes an approach to resolve it. The emerging conclusion is that corporate governance is likely to develop endogenously and depend on specific characteristics of the firm and its environment.
Financial Transactions Tax : Panacea, Threat, or Damp Squib?
(World Bank, 2011-07-02) Honohan, Patrick; Yoder, Sean
The authors argue that attempts to raise a significant percentage of gross domestic product in revenue from a broad-based financial transactions tax are likely to fail both by raising much less revenue than expected and by generating far-reaching changes in economic behavior. They point out that, although the side effects would include a sizable restructuring of financial sector activity, this would not occur in ways corrective of the particular forms of financial overtrading that were most conspicuous in contributing to the crisis. Accordingly, such taxes likely deliver both less revenue and less efficiency benefits than have sometimes been claimed by some. On the other hand, they may be less damaging than feared by others.
Urban Road Transportation Externalities : Costs and Choice of Policy Instruments
(World Bank, 2011-07-02) Timilsina, Govinda R.; Dulal, Hari B.
Urban transportation externalities are a key development challenge. Based on the existing literature, the authors illustrate the magnitudes of various external costs, review response policies, and measure and discuss their selection, particularly focusing on the context of developing countries. They find that regulatory policy instruments aimed at reducing local air pollution have been introduced in most countries in the world. On the other hand, fiscal policy instruments aimed at reducing congestion or greenhouse gas emissions are limited mainly to industrialized economies. Although traditional fiscal instruments, such as fuel taxes and subsidies, are normally introduced for other purposes, they can also help to reduce externalities. Land-use or urban planning, and infrastructure investment, could also contribute to reducing externalities; but they are expensive and play a small role in already developed megacities. The main factors that influence the choice of policy instruments include economic efficiency, equity, country or city specific priority, and institutional capacity for implementation. Multiple policy options need to be used simultaneously to reduce effectively the different externalities arising from urban road transportation because most policy options are not mutually exclusive.