The literature on aid and growth has not found a convincing instrumental variable to identify the causal effects of aid. A new World Bank policy research working paper exploits an instrumental variable based on the fact that since 1987, eligibility for aid from the International Development Association (IDA) has been based partly on whether or not a country is below a certain threshold of per capita income. The paper finds evidence that other donors tend to reinforce rather than compensate for reductions in IDA aid following threshold crossings. Overall, aid as a share of gross national income (GNI) drops about 59 percent on average after countries cross the threshold. Focusing on the 35 countries that have crossed the income threshold from below between 1987 and 2010, a positive, statistically significant, and economically sizable effect of aid on growth is found. A one percentage point increase in the aid to GNI ratio from the sample mean raises annual real per capita growth in gross domestic product by approximately 0.35 percentage points. The analysis shows that the main channel through which aid promotes growth is by increasing physical investment.
The following post is a part of a series that discusses 'mind and mindsets,' the theme of the World Bank’s upcoming World Development Report 2015.
If you had to guess, what would you say is the leading cause of unnatural deaths in Mumbai, one of India’s largest cities? Fire? Car wrecks? Suicide? In fact, the number one cause of unnatural deaths in Mumbai is railway track accidents.
According to India Railroad, in Mumbai, 10 people die everyday crossing the railway tracks. This amounts to more than 3,500 people a year, only in Mumbai. In fact, 15,000 people are killed every year while crossing rail tracks in India. But what causes these accidents? Is it because the individuals don’t know when the train is coming? Do they have poor visibility?
Information on the situation prior to the outbreak of the crisis is critical for understanding the current situation in Ukraine. As far as economics is concerned, macro-economic data--such as income per capita and unemployment rates-- is definitely important but it does not necessarily capture various dimensions of the business climate and the actual experiences of private agents in dealing with the government. Other factors play a big role, for example, how often do firms pay bribes to obtain licenses and permits in Ukraine? Have these unofficial payments increased over time? In order to answer these questions, we must zero in on what actual firms really experience.
- Enterprise Surveys
Informal industries and markets, with many small producers and suppliers, are generally more difficult to regulate than their organized counterparts, dominated by larger corporations.
Adulteration of food, for instance, is more common in small, informal outlets than when sold by large, branded firms. It was part of the lore in South Asia that milk bought from small, informal cattle owners would be adulterated with water (which on charitable days may be viewed as traditional technology for converting 4%-fat milk to 2%). A recent study in Barisal District of Bangladesh found that while small percentages of milk samples had different kinds of adulteration, when it came to added water, 100% of the samples had it.
The World Health Organization, the United Nations, and the World Bank jointly released data and a report on new maternal mortality estimates (1990-2013). Using illustrative charts, the Bank's Development Data Group demographer Emi Suzuki blogs about how the data shows meaningful progress in reducing maternal mortality.
The World Bank Group’s Doing Business project provides objective measures of business regulations and their implementation across economies worldwide and selected cities at the subnational and regional level. The first Doing Business report, published in 2003, covered five indicator sets and 133 economies. The most recent report published in late 2013 covered 11 indicator sets and 189 economies.
As with most key international indicator sets, Doing Business has come a long way since its inception in 2002/2003 and continues to be a work in progress. The report team works to improve the methodology each year and to enhance their data collection, analysis and output.
- doing business
A fascinating feature of purchasing power parity (PPP) is more people hold an opinion on it than know what it means. This was in ample display last week, when the Global Office of the International Comparison Program (ICP), hosted by the World Bank, announced the latest PPP data for the world, pertaining to 2011.
Putting aside complexities, PPPs may be viewed as an estimate what one US dollar can buy in different countries. In case a dollar in Ghana can buy three times what it can buy in the United States, then a person who earns 1,000 dollars each month in Ghana is said to earn 3,000 in terms of ‘PPP-adjusted dollars’.
There is a lot of public discussion about Thomas Piketty’s book on capital and its implications for inequality. His work strikes a chord with many of us because it outlines a future where basically your own or inherited wealth matters and where wage income and apparently your human capital does not matter that much for your income generation. So how do we escape such a one-sided and unequal world? Well, maybe one way is to understand better the interaction between growth, changes in the income distribution, and their implications for shared prosperity.
On September 23rd 2013, Gary Becker spoke about inequality and government policy here at the World Bank. In introducing him, Kaushik Basu, the Chief Economist at the World Bank, paid him the highest tribute, calling him one of the most towering figures in our profession. “There are people who describe themselves as Beckerian and that is important,” Kaushik said. “But Gary Becker is much more than that. Many years ago at a conference, someone came to me and said, ‘You know, I am non-Beckerian’. It is one thing to have a school. But to have a school that is identified as ‘non-you’ is truly remarkable. We do hear of the non-Euclidean school and a few others, but this puts you in a special category.”