Budgetary institutions and expenditure outcomes : binding governments to fiscal performance

The authors examine how institutional arrangements affect incentives that govern the size, allocation, and use of budgetary resources. They use a diagnostic questionnaire to elicit the relative strengths and weaknesses of specific systems in terms of instilling fiscal discipline, strategically assigning spending priorities, and making the best use of limited resources. In applying their methodology to a sample of seven countries (Australia, Ghana, Indonesia, Malawi, New Zealand, Thailand and Uganda) they also examine how donor assistance affects expenditure outcomes. In New Zealand, reform focused on achieving general fiscal discipline and technical efficiency. In Australia, reform focused on strategic priorities and a shift from central to line agencies. The two countries took different paths, but both sought to alter incentives that affect the size, allocation, and use of resources and to improve transparency and accountability. Systems in Indonesia and Thailand were reasonably effective in instilling fiscal discipline, butIndonesia seemed better at allocating resources to protect basic social services and alleviate poverty during fiscal austerity periods. Thailand's overcentralized system did not capitalize on useful information from line agencies and lower levels of government. Donors play a central role in spending outcome in the three African countries. Donors provided incentives for short-term fiscal discipline, but the imposed spending cuts impeded the prioritizing of expenditures and multiple donor projects fragmented budgets. Donor conditionality on the composition of expenditures and donor-driven attempts to improve technical efficiency, were ineffective. Lack of transparency and accountability meant rules were not enforced and budgets were often remade in an ad hoc, centralized way, so that the flow of resources to line agencies was unpredictable.Business Environment,Decentralization,Environmental Economics&Policies,Public Sector Economics&Finance,Health Economics&Finance,Poverty Assessment,Health Economics&Finance,National Governance,Public Sector Economics&Finance,Environmental Economics&Policies

Skills shortages and training in Russian enterprises

In the transition to a market economy, the Russian workforce underwent a wrenching period of change, with excess supply of some industrial skills coexisting with reports of skills shortages by many enterprises. This paper uses data from the Russia Competitiveness and Investment Climate Survey and related local research to gain insight into the changing supply and demand for skills over time, and the potential reasons for reported staffing problems and skills shortages, including labor turnover, compensation policies, and the inhibiting effects of labor regulations. It discusses in-service training as an enterprise strategy for meeting staffing and skills needs, and presents evidence on the distribution, intensity, and determinants of in-service training in Russia. It investigates the productivity and wage outcomes of in-service training, and the supportive role of training in firms'research and development and innovative activities. A final section concludes with some policy implications of the findings.Education For All,Access&Equity in Basic Education,Labor Markets,Primary Education,Teaching and Learning

Moral Hazard, Adverse Selection and Health Expenditures: A Semiparametric Analysis

Theoretical models predict asymmetric information in health insurance markets may generate inefficient outcomes due to adverse selection and moral hazard. However, previous empirical research has found it difficult to disentangle adverse selection from moral hazard in health care. We empirically study this question by using data from the Health and Retirement Study to estimate a structural model of the demand for health insurance and medical care. Using a two-step semi-parametric estimation strategy we find significant evidence of moral hazard, but not of adverse selection.

Rethinking Governance: Empirical Lessons Challenge Orthodoxy

In this discussion draft, linking research findings with concrete operational challenges, we review key issues in worldwide governance, and present recent empirical evidence. Focusing on defining and unbundling key governance components, such as rule of law, voice and accountability, corruption control, and state capture, we then provide evidence which suggests a sobering picture: on average, there appears to be scant progress worldwide in recent times in improving rule of law and governance, in controlling corruption, and in improving institutional quality -- although there is clearly variance across countries. Further, recent empirical research points to the private sector as influencing public governance, thereby challenging traditional notions of the functioning of politicians, public policy and the public sector, and on the conventional determinants of the investment climate. We posit that the interplay between the elite’s vested interests and the political dynamics within a country, in turn affecting governance and corruption, has often been under-emphasized in program design. These argue for revisiting conventional approaches to promote institutional reform. In particular, we challenge the notion that passing laws by fiat, creating new public institutions, or embarking on anti-corruption 'campaigns', can be very effective, and question the value of traditional public sector management and conventional legal/judiciary reform approaches for many emerging economies. We argue instead that sharper focus on external accountability is required, focusing on: transparency mechanisms and empirically-based monitoring tools (including e*governance), as well as participatory 'voice' and incentive-driven approaches for prevention. These need to feature more prominently in providing checks and balances on traditional public institutions, in empowering non-traditional stakeholders, and in ameliorating state capture and mitigating the very ‘unequal influence' playing field in many countries. In turn, this necessitates probing deeper into the private-public governance nexus, which inter alia leads to focusing on concrete measures to address the challenges of political contestability, political financing reform, and transparency in parliaments, the judiciary and the executive. Recommendations on governance strategies for the next phase are suggested, including on the role of the international community.governance, empirical analysis, corruption, rule of law, accountability, state capture, public policy, public sector management, transparency, indicators

Empirical Calibration of a Least-Cost Conservation Reserve Program

Mechanism design models typically conclude by characterizing an optimal allocation schedule based on the principal's beliefs regarding agent value functions and the distribution of agent types. This article addresses the question of how a principal can develop these beliefs given a standard cross-sectional data set in which agents' input-output choices are observable, but their underlying heterogeneity is not. I employ the methodology to evaluate strategies for reducing the cost of a voluntary program that reduces cultivation on environmentally-sensitive farmland.Environmental Economics and Policy,

Metamodel-based model conformance and multiview consistency checking

Model-driven development, using languages such as UML and BON, often makes use of multiple diagrams (e.g., class and sequence diagrams) when modeling systems. These diagrams, presenting different views of a system of interest, may be inconsistent. A metamodel provides a unifying framework in which to ensure and check consistency, while at the same time providing the means to distinguish between valid and invalid models, that is, conformance. Two formal specifications of the metamodel for an object-oriented modeling language are presented, and it is shown how to use these specifications for model conformance and multiview consistency checking. Comparisons are made in terms of completeness and the level of automation each provide for checking multiview consistency and model conformance. The lessons learned from applying formal techniques to the problems of metamodeling, model conformance, and multiview consistency checking are summarized

Approach towards an operational tool to apply institutional analysis for the assessment of policy feasibility within SEAMLESS-IF

Environmental Economics and Policy,

Electricity Sector Reform in Developing Countries: A Survey of Empirical Evidence on Determinants and Performance

This paper reviews the empirical evidence on electricity reform in developing countries. We find that country institutions and sector governance play an important role in success and failure of reform; reforms appear to have increased operating efficiency and expanded access to urban customers; they have to a lesser degree passed on efficiency gains to customers, tackled distributional effects, or improved rural access. Moreover, some of the literature is not methodologically robust or on a par with general development economics literature and findings on some issues are limited and inconclusive while some important areas are yet to be addressed. Until we know more, implementation of reforms will be more based on ideology and economic theory rather than solid economic evidence.The World Bank Electricity Research Programme and the CMI Electricity Project (IR-45

A Many-Country Model of Industrialization

We draw attention to the role of economic geography in explaining important cross-sectional facts which are difficult to account for in existing models of industrialization. By construction, closed-economy models that stress the role of local demand in generating sufficient expenditure on manufacturing goods are not suited to explain the strong and negative correlation between distance to the world's main markets and levels of manufacturing activity in the developing world. Secondly, open-economy models that emphasize the importance of comparative advantage are at odds with a positive correlation between the ratio of agricultural to manufacturing productivity and shares of manufacturing in GDP. This paper provides a potential explanation for these puzzles by nesting the above theories in a multi-location model with trade costs. Using a number of simple analytical examples and a full-scale multi-country calibration, we show that the model can replicate the above stylized facts.Industrialization, economic geography, international trade