Template-Type: ReDIF-Article 1.0 Title: Circumstance and Choice: The Role of Initial Conditions and Policies in Transition Economies Journal: World Bank Economic Review Author-Name: Martha de Melo Author-Name: Cevdet Denizer Author-Name: Alan Gelb Author-Name: Stoyan Tenev Year: 2001 Volume: 15 Issue: 1 Pages: 1--31 File-URL: http://www.jstor.org/stable/3990069 Abstract: This article takes an integrated approach to evaluating the interaction of initial conditions, political change, reforms and economic performance in a unified framework covering 28 transition economies in East Asia, Central and Eastern Europe, and the FSU. Initial conditions and economic policy jointly determine the large differences in economic performance among transition economies. Initial conditions dominate in explaining inflation, but economic liberalization is the most important factor determining differences in growth. Political reform emerges as the most important determinant of the speed and comprehensiveness of economic liberalization, raising the important question of what determines political liberalization. Results suggest the importance of the level of development in determining the decision to expand political freedoms. Handle: RePEc:oup:wbecrv:2001:15:1:1--31 Template-Type: ReDIF-Article 1.0 Title: Multi-Tier Targeting of Social Assistance: The Role of Intergovernmental Transfers Journal: World Bank Economic Review Author-Name: Harold Alderman Year: 2001 Volume: 15 Issue: 1 Pages: 33--53 File-URL: http://www.jstor.org/stable/3990070 Abstract: Albania provides a small amount of social assistance to nearly 20 percent of its population through a system that allows some community discretion in determining distribution. This study investigates how well this social assistance program is targeted to the poor. Relative to other safety net programs in low-income countries, social assistance in Albania is fairly well targeted. Nevertheless, the system is hampered by the absence of a clear, objective criterion to determine the size of the grants from the central government to communes as well as limited information that could be used to implement this criterion. Substantial gains in targeting could be achieved if the central government better allocated transfers to local governments, even holding local targeting at base levels. Handle: RePEc:oup:wbecrv:2001:15:1:33--53 Template-Type: ReDIF-Article 1.0 Title: Flight Capital as a Portfolio Choice Journal: World Bank Economic Review Author-Name: Paul Collier Author-Name: Anke Hoeffler Author-Name: Catherine Pattillo Year: 2001 Volume: 15 Issue: 1 Pages: 55--80 File-URL: http://www.jstor.org/stable/3990071 Abstract: This article sets flight capital in the context of portfolio choice, focusing on the proportion of private wealth that is held abroad. There are large regional differences in this proportion, ranging from 5 percent in South Asia to 40 percent in Africa. The authors explain cross-country differences in portfolio choice using variables that proxy differences in the risk-adjusted rate of return on capital. They apply the results to three policy issues: how the East Asian crisis affected domestic capital outflows; the effect of the International Monetary Fund-World Bank debt relief initiative for heavily indebted poor countries on capital repatriation; and why so much of Africa's private wealth is held outside the continent. Handle: RePEc:oup:wbecrv:2001:15:1:55--80 Template-Type: ReDIF-Article 1.0 Title: The Impact of Early Childhood Nutritional Status on Cognitive Development: Does the Timing of Malnutrition Matter? Journal: World Bank Economic Review Author-Name: Paul Glewwe Author-Name: Elizabeth M. King Year: 2001 Volume: 15 Issue: 1 Pages: 81--113 File-URL: http://www.jstor.org/stable/3990072 Abstract: This article uses longitudinal data from the Philippines to examine whether the timing of malnutrition in early childhood is a critical factor in determining subsequent cognitive development. Although some observers have argued that the first six months of life are the most critical in the sense that malnutrition during that time period harms cognitive development more than malnutrition later in life, analysis of the Philippines data does not support this claim. To the contrary, the data suggest that malnutrition in the second year of life may have a larger negative impact than malnutrition in the first year of life. Handle: RePEc:oup:wbecrv:2001:15:1:81--113 Template-Type: ReDIF-Article 1.0 Title: The Mystery of the Vanishing Benefits: An Introduction to Impact Evaluation Journal: World Bank Economic Review Author-Name: Martin Ravallion Year: 2001 Volume: 15 Issue: 1 Pages: 115--140 File-URL: http://www.jstor.org/stable/3990073 Abstract: This article provides an introduction to the concepts and methods of impact evaluation. The author provides an intuitive explanation in the context of a concrete application. The article takes the form of a short story about a fictional character's on-the-job training in evaluation. Ms. Speedy Analyst is an economist in the Ministry of Finance in the fictional country of Labas. In the process of figuring out how to evaluate a human resource program targeted to the poor, Ms. Analyst learns the strengths and weaknesses of the main methods of ex post impact evaluation. Handle: RePEc:oup:wbecrv:2001:15:1:115--140 Template-Type: ReDIF-Article 1.0 Title: Does Ignoring Heterogeneity in Impacts Distort Project Appraisals? An Experiment for Irrigation in Vietnam Journal: World Bank Economic Review Author-Name: Dominique van de Walle Author-Name: Dileni Gunewardena Year: 2001 Volume: 15 Issue: 1 Pages: 141--164 File-URL: http://www.jstor.org/stable/3990074 Abstract: Could the simplifying assumptions made in project appraisal be so far from the truth that the expected benefits of public investments are not realized? Using data for Vietnam, commonly used estimates of the benefits from irrigation investments based on means are compared with impacts assessed through an econometric modeling of marginal returns that allows for household and area heterogeneity using integrated household-level survey data. The simpler method performs well in estimating average benefits nationally but can be misleading for some regions, and, by ignoring heterogeneity, it overestimates gains to the poor and underestimates gains to the rich. At moderate to high cost levels, ignoring heterogeneity in impacts results in enough mistakes to eliminate the net benefits from public investment. When irrigating as little as 3 percent of Vietnam's nonirrigated land, the savings from the more data-intensive method are sufficient to cover the full cost of the extra data required, ignoring other benefits from that data. Handle: RePEc:oup:wbecrv:2001:15:1:141--164 Template-Type: ReDIF-Article 1.0 Title: New Tools in Comparative Political Economy: The Database of Political Institutions Journal: World Bank Economic Review Author-Name: Thorsten Beck Author-Name: George Clarke Author-Name: Alberto Groff Author-Name: Philip Keefer Author-Name: Patrick Walsh Year: 2001 Volume: 15 Issue: 1 Pages: 165--176 File-URL: http://www.jstor.org/stable/3990075 Abstract: This article introduces a large new cross-country database, the Database of Political Institutions. It covers 177 countries over 21 years, 1975-95. The article presents the intuition, construction, and definitions of the different variables. Among the novel variables introduced are several measures of checks and balances, tenure and stability, identification of party affiliation with government or opposition, and fragmentation of opposition and government parties in the legislature. Handle: RePEc:oup:wbecrv:2001:15:1:165--176 Template-Type: ReDIF-Article 1.0 Title: It's Not Factor Accumulation: Stylized Facts and Growth Models Journal: World Bank Economic Review Author-Name: William Easterly Author-Name: Ross Levine Year: 2001 Volume: 15 Issue: 2 Pages: 177--219 File-URL: http://www.jstor.org/stable/3990260 Abstract: The article documents five stylized facts of economic growth. (1) The "residual" (total factor productivity, TFP) rather than factor accumulation accounts for most of the income and growth differences across countries. (2) Income diverges over the long run. (3) Factor accumulation is persistent while growth is not, and the growth path of countries exhibits remarkable variation. (4) Economic activity is highly concentrated, with all factors of production flowing to the richest areas. (5) National policies are closely associated with long-run economic growth rates. These facts do not support models with diminishing returns, constant returns to scale, some fixed factor of production, or an emphasis on factor accumulation. However, empirical work does not yet decisively distinguish among the different theoretical conceptions of TFP growth. Economists should devote more effort toward modeling and quantifying TFP. Handle: RePEc:oup:wbecrv:2001:15:2:177--219 Template-Type: ReDIF-Article 1.0 Title: Comment on 'It's Not Factor Accumulation: Stylized Facts and Growth Models,' by William Easterly and Ross Levine Journal: World Bank Economic Review Author-Name: Pete Klenow Year: 2001 Volume: 15 Issue: 2 Pages: 221--224 File-URL: http://www.jstor.org/stable/3990261 Handle: RePEc:oup:wbecrv:2001:15:2:221--224 Template-Type: ReDIF-Article 1.0 Title: Comment on 'It's Not Factor Accumulation: Stylized Facts and Growth Models,' by William Easterly and Ross Levine Journal: World Bank Economic Review Author-Name: Paul Romer Year: 2001 Volume: 15 Issue: 2 Pages: 225--227 File-URL: http://www.jstor.org/stable/3990262 Handle: RePEc:oup:wbecrv:2001:15:2:225--227 Template-Type: ReDIF-Article 1.0 Title: Growth Empirics and Reality Journal: World Bank Economic Review Author-Name: William A. Brock Author-Name: Steven N. Durlauf Year: 2001 Volume: 15 Issue: 2 Pages: 229--272 File-URL: http://www.jstor.org/stable/3990263 Abstract: This article questions current empirical practice in the study of growth. It argues that much of the modern empirical growth literature is based on assumptions about regressors, residuals, and parameters that are implausible from the perspective of both economic theory and the historical experiences of the countries under study. Many of these problems, it argues, are forms of violations of an exchangeability assumption that implicitly underlies standard growth exercises. The article shows that these implausible assumptions can be relaxed by allowing for uncertainty in model specification. Model uncertainty consists of two types: theory uncertainty, which relates to which growth determinants should be included in a model; and heterogeneity uncertainty, which relates to which observations in a data set constitute draw from the same statistical model. The article proposes ways to account for both theory and heterogeneity uncertainty. Finally, using an explicit decision-theoretic framework, the authors describe how one can engage in policy-relevant empirical analysis. Handle: RePEc:oup:wbecrv:2001:15:2:229--272 Template-Type: ReDIF-Article 1.0 Title: Comment on 'Growth Empirics and Reality,' by William A. Brock and Steven N. Durlauf Journal: World Bank Economic Review Author-Name: Lant Pritchett Year: 2001 Volume: 15 Issue: 2 Pages: 273--275 File-URL: http://www.jstor.org/stable/3990264 Handle: RePEc:oup:wbecrv:2001:15:2:273--275 Template-Type: ReDIF-Article 1.0 Title: Comment on 'Growth Empirics and Reality,' by William A. Brock and Steven N. Durlauf Journal: World Bank Economic Review Author-Name: Xavier Sala-i-Martin Year: 2001 Volume: 15 Issue: 2 Pages: 277--282 File-URL: http://www.jstor.org/stable/3990265 Handle: RePEc:oup:wbecrv:2001:15:2:277--282 Template-Type: ReDIF-Article 1.0 Title: Applying Growth Theory across Countries Journal: World Bank Economic Review Author-Name: Robert M. Solow Year: 2001 Volume: 15 Issue: 2 Pages: 283--288 File-URL: http://www.jstor.org/stable/3990266 Handle: RePEc:oup:wbecrv:2001:15:2:283--288 Template-Type: ReDIF-Article 1.0 Title: Crisis Transmission: Evidence from the Debt, Tequila, and Asian Flu Crises Journal: World Bank Economic Review Author-Name: José De Gregorio Author-Name: Rodrigo O. Valdés Year: 2001 Volume: 15 Issue: 2 Pages: 289--314 File-URL: http://www.jstor.org/stable/3990267 Abstract: This article analyzes how external crises spread across countries. The authors analyze the behavior of four alternative crisis indicators in a sample of 20 countries during three well-known crises: the 1982 debt crisis, the 1994 Mexican crisis, and the 1997 Asian crisis. The objective is twofold: to revisit the transmission channels of crises, and to analyze whether capital controls, exchange rate flexibility, and debt maturity structure affect the extent of contagion. The results indicate that there is a strong neighborhood effect. Trade links and similarity in precrisis growth also explain (to a lesser extent) which countries suffer more contagion. Both debt composition and exchange rate flexibility to some extent limit contagion, whereas capital controls do not appear to curb it. Handle: RePEc:oup:wbecrv:2001:15:2:289--314 Template-Type: ReDIF-Article 1.0 Title: Mutual Fund Investment in Emerging Markets: An Overview Journal: World Bank Economic Review Author-Name: Graciela L. Kaminsky Author-Name: Richard K. Lyons Author-Name: Sergio L. Schmukler Year: 2001 Volume: 15 Issue: 2 Pages: 315--340 File-URL: http://www.jstor.org/stable/3990268 Abstract: International mutual funds are key contributors to the globalization of financial markets and one of the main sources of capital flows to emerging economies. Despite their importance in emerging markets, little is known about their investment allocation and strategies. This article provides an overview of mutual fund activity in emerging markets. It describes their size, asset allocation, and country allocation and then focuses on their behavior during crises in emerging markets in the 1990s. It analyzes data at both the fund-manager and fund-investor levels. Due to large redemptions and injections, funds' flows are not stable. Withdrawals from emerging markets during recent crises were large, which is consistent with the evidence on financial contagion. Handle: RePEc:oup:wbecrv:2001:15:2:315--340 Template-Type: ReDIF-Article 1.0 Title: Capital Account Liberalization: What Do Cross-Country Studies Tell Us? Journal: World Bank Economic Review Author-Name: Barry Eichengreen Year: 2001 Volume: 15 Issue: 3 Pages: 341--365 File-URL: http://www.jstor.org/stable/3990106 Abstract: Capital account liberalization, it is fair to say, remains one of the most controversial and least understood policies of our day. One reason is that different theoretical perspectives have very different implications for the desirability of liberalizing capital flows. Another is that empirical analysis has failed to yield conclusive results. Handle: RePEc:oup:wbecrv:2001:15:3:341--365 Template-Type: ReDIF-Article 1.0 Title: Where Has All the Education Gone? Journal: World Bank Economic Review Author-Name: Lant Pritchett Year: 2001 Volume: 15 Issue: 3 Pages: 367--391 File-URL: http://www.jstor.org/stable/3990107 Abstract: Cross-national data show no association between increases in human capital attributable to the rising educational attainment of the labor force and the rate of growth of output per worker. This implies that the association of educational capital growth with conventional measures of total factor production is large, strongly statistically significant, and negative. These are "on average" results, derived from imposing a constant coefficient. However, the development impact of education varied widely across countries and has fallen short of expectations for three possible reasons. First, the institutional/governance environment could have been sufficiently perverse that the accumulation of educational capital lowered economic growth. Second, marginal returns to education could have fallen rapidly as the supply of educated labor expanded while demand remained stagnant. Third, educational quality could have been so low that years of schooling created no human capital. The extent and mix of these three phenomena vary from country to country in explaining the actual economic impact of education, or the lack thereof. Handle: RePEc:oup:wbecrv:2001:15:3:367--391 Template-Type: ReDIF-Article 1.0 Title: Measuring the Dynamic Gains from Trade Journal: World Bank Economic Review Author-Name: Romain Wacziarg Year: 2001 Volume: 15 Issue: 3 Pages: 393--429 File-URL: http://www.jstor.org/stable/3990108 Abstract: This article investigates the links between trade policy and economic growth in a panel of 57 countries between 1970 and 1989. It develops a new measure of trade policy openness based on the policy component of trade shares, using it in a simultaneous equations system to identify the effect of trade policy on several determinants of growth. The results suggest a positive impact of openness on economic growth, with the accelerated accumulation of physical capital accounting for more than half the total effect; enhanced technology transmission and improvements in macroeconomic policy account for smaller effects. This decomposition is robust with respect to alternative specifications and time periods. The article also successfully tests whether the model exhaustively captures the effects of trade policy on growth. Handle: RePEc:oup:wbecrv:2001:15:3:393--429 Template-Type: ReDIF-Article 1.0 Title: Ownership and Growth Journal: World Bank Economic Review Author-Name: Thorvaldur Gylfason Author-Name: Tryggvi Thor Herbertsson Author-Name: Gylfi Zoega Year: 2001 Volume: 15 Issue: 3 Pages: 431--449 File-URL: http://www.jstor.org/stable/3990109 Abstract: This article suggests how state enterprises can be incorporated into the theoretical and empirical growth literature. Specifically, it shows that if state enterprises are less efficient than private firms, invest less, employ less skilled labor, and are less eager to adopt new technology, then a large state enterprise sector tends to be associated with slow economic growth, all else remaining the same. The empirical evidence for 1978-92 indicates that, through a mixture of these channels, an increase in the share of state enterprises in employment by one standard deviation could reduce per capita growth by one to two percentage points a year from one country to another. Handle: RePEc:oup:wbecrv:2001:15:3:431--449 Template-Type: ReDIF-Article 1.0 Title: Infrastructure, Geographical Disadvantage, Transport Costs, and Trade Journal: World Bank Economic Review Author-Name: Nuno Limão Author-Name: Anthony J. Venables Year: 2001 Volume: 15 Issue: 3 Pages: 451--479 File-URL: http://www.jstor.org/stable/3990110 Abstract: The authors use different data sets to investigate the dependence of transport costs on geography and infrastructure. Infrastructure is an important determinant of transport costs, especially for landlocked countries. Analysis of bilateral trade data confirms the importance of infrastructure and gives an estimate of the elasticity of trade flows with respect to the trade cost factor of around -3. A deterioration of infrastructure from the median to the 75th percentile raises transport costs by 12 percentage points and reduces trade volumes by 28 percent. Analysis of African trade flows indicates that their relatively low level is largely due to poor infrastructure. Handle: RePEc:oup:wbecrv:2001:15:3:451--479 Template-Type: ReDIF-Article 1.0 Title: Deposit Insurance around the World Journal: World Bank Economic Review Author-Name: Asli Demirgüç-Kunt Author-Name: Tolga Sobaci Year: 2001 Volume: 15 Issue: 3 Pages: 481--490 File-URL: http://www.jstor.org/stable/3990111 Abstract: In the past two decades, in a series of banking crises around the world, banks have become systematically insolvent. These crises have occurred in developed and developing economies alike. To make such financial system breakdowns less likely and to limit their costs if they occur, policymakers feel the need for financial safety nets. These include such policies as implicit or explicit deposit insurance, a lender of last resort function of the central bank, bank insolvency resolution procedures, and bank regulation and supervision. Of these policies, explicit deposit insurance has been gaining popularity in recent years. Since the 1980s the number of countries with explicit deposit insurance schemes almost tripled, with most OECD countries and an increasing number of developing economies adopting some form of explicit depositor protection. In 1994 deposit insurance became the standard for the newly created single banking market of the European Union. Establishing an explicit deposit insurance scheme became part of the generally accepted best practice advice given to developing economies. Handle: RePEc:oup:wbecrv:2001:15:3:481--490