The Impact of Performance Intensive Policy Intervention: Aid Policy that is Performance Intensive

We examine a two country aid model with performance intensive aid. The aid budget is determined by a donor country legislature, but allocated by a donor agency in terms of a performance criterion of its choice. Five sources of slippage in policy delivery are introduced: the donor agency observes the performance of the aid recipient imperfectly; the donor agency and the aid recipient are subject to inefficiency; the aid recipient experiences corruption; and adjustment of aid recipient performance is costly. Incentives between the aid donor and the aid recipient are intentionally aligned - to explore the best-case for the policy intervention. Immediate implications are then that optimal level of effort and governance in the aid recipient increase under performance intensity of aid. Moreover, performance intensity of aid has fundraising effects. While the aid recipient also has an incentive to increase the measurement noise in governance, this incentive is weaker than that to raise true underlying governance, is weakest for the poorest aid recipients and provided that the donor agency is sufficiently efficient, measurement error itself will serve to raise optimal effort in the aid recipient. The importance of aid agency self-monitoring is thereby identified. Three important qualifications on the anticipated success of the policy emerge, however. Despite the elimination of incentive misalignment, aid donors may come to rely on performance intensity precisely where such a reliance is likely to be least successful in aid recipients. Second, performance intensity of aid maximizes its impact under conditions where it is supplemented by technical assistance to improve the effectiveness of own effort by the aid recipient. Finally, under convex adjustment costs the general class of optimal time paths in governance in aid recipients will be non-monotone, such that governance may get worse before they get better - optimally so. Performance intensive policy may thus appear to fail - immediately after imposition.

Heterogeneity Happens: How Rights Matter in Economic Development

The paper examines how much governance matters for long run economic development in poor countries. Answering this question confronts four methodological challenges. First, since growth equations are likely to be underspecified, unobserved effects are likely to render standard estimators biased and inconsistent. Second, measurement error, time-varying unobserved effects, and possible feedback from growth into governance will violate the exogeneity assumptions of many estimators. Bias and inconsistency is again the consequence. Third, use of cross-country evidence opens the possibility that the interaction between governance and growth shows considerable country-specificity. In the presence of heterogeneity, estimation under a specification that imposes homogeneity on the governance – growth link, will again result in bias and inconsistency. Finally, an assumption of linearity in the growthâ€governance relationship across large ranges of per capita income and differences in institutional structure is at least questionable. The paper addresses these problems by contrasting results obtained under pooled OLS, fixed effects, GMM, country specific time series and PMG estimators. Results confirm that all four methodological concerns are valid. Taking account of the problems renders estimates of the impact of governance more robust, and serves to increase its impact. Our best estimate of the impact of improving rights on the level of real per capita output is that this differs between countries with good, mid-range and poor rights. The implied elasticities of a benevolent impact on the level of real per capita output of improving rights ranging from 0.28 to 0.22 for countries with the worst rights, and 0.07-0.02 for countries with the best rights. Countries with midrange rights have a perverse association between improving rights and output, though the estimated elasticity range is relatively weak over the 0.03-0.02 range. Improving rights have an indirect impact on output as well a direct one. Improving rights serve to increase the productivity of investment, with the elasticity of output with respect to investment rising from 0.29 to 0.45 between countries with the worst rights, and those with midâ€range rights (thus improving its productivity by a factor of 1.6). The impact of economic policy on output similarly improves under improved governance – though more weakly than the productivity of investment – with both the openness and the anti-inflationary policy stance of the economy proving to be significant. Investment in human capital by contrast has an impact on output that is invariant to the level of rights. The estimated elasticity of education on output reaches 0.44 at an average of eleven years of schooling, and unitary elasticity at an average of 25 years of schooling. These results find a significant echo, but also some nuance in equations specified in terms of economic growth. Substantively, our estimation results confirm an increasing productivity of investment for growth purposes under rising governance, and they are consistent with rising levels of investment under improving governance. Further evidence in support of the impact of good governance comes from the fact that physical capital, human capital, openness of the economy, foreign direct investment and anti-inflationary economic policy all further spur growth – often dramatically so. By contrast, for midâ€range rights countries only investment in physical capital raises economic growth (though strongly so), while for poor rights countries empirical results prove mixed at best. The implications are twofold. Under good governance policy makers have the gamut of standard policy handles at their disposal in promoting growth. Their task is correspondingly easier. And on a methodological note, the finding of strong heterogeneity across countries serves to offer an explanation of why the literature may have struggled to isolate particularly robust results under cross sectional and insufficiently sophisticated panel estimators.Governance, economic growth, rights

Recycling petrodollars

In recent years, oil-exporting countries have experienced windfall gains with the rise in the price of oil. A look at how oil exporters "recycle" their revenues reveals that roughly half of the petrodollar windfall has gone to purchase foreign goods, especially from Europe and China, while the remainder has been invested in foreign assets. Although it is difficult to determine where the funds are first invested, the evidence suggests that the bulk are ending up, directly or indirectly, in the United States.Petroleum industry and trade ; Investments, Foreign

Cognitive Equality and Educational Policies: An Example from Pakistan

An empirical study of distributions of examination scores within secondary schools in Karachi shows that intraschool inequalities are relatively large. The results of several analyses are consistent with the hypothesis that either schools in Karachi do not care about the equality of their students' cognitive achievement, or if they do care, current policies are ineffective at reducing or widening their distributions of scores

Bailout or bust? Government evaluations in the wake of a bailout

Governments are often punished for negative events such as economic downturns and financial shocks. However, governments can address such shocks with salient policy responses that might mitigate public punishment. We use three high-quality nationally representative surveys collected around a key event in the history of the Dutch economy, namely the outbreak of the financial crisis in 2008, to examine how voters responded to a salient government bailout. The results illustrate that governments can get substantial credit for pursuing a bailout in the midst of a financial crisis. Future research should take salient policy responses into account to fully understand the public response to the outbreak of financial and economic crises

Højre, venstre eller midte? Et empirisk perspektiv på partirummet i dansk politik

”Right, left or centre? An empirical perspective on the party space of Danish politics”: In order to predict the outcomes of parliamentary voting and coalition formation, etc., it is necessary to have information about how the political actors are located relative to each other. We identify four different data sources that have been used to establish the empirical location of parties in the Danish political space along a uni-dimensional left-right continuum: Voter surveys; expert and elite surveys; voting data; coding of political texts. Furthermore, we identify a large number of quantitative methods with which such data, covering the years 1920-2007, have been aggregated into party spaces. A tentative comparison of two selected sub-periods displays a considerable consistency between the different methods, although a few methods seem visibly less consistent with the rest. The tales of the demise of the left-right scale seems exaggerated in the case of Danish politics; while policies may change, the underlying dimension seems more or less unchanged

Højre, venstre eller midte? Et empirisk perspektiv på partirummet i dansk politik

”Right, left or centre? An empirical perspective on the party space of Danish politics”: In order to predict the outcomes of parliamentary voting and coalition formation, etc., it is necessary to have information about how the political actors are located relative to each other. We identify four different data sources that have been used to establish the empirical location of parties in the Danish political space along a uni-dimensional left-right continuum: Voter surveys; expert and elite surveys; voting data; coding of political texts. Furthermore, we identify a large number of quantitative methods with which such data, covering the years 1920-2007, have been aggregated into party spaces. A tentative comparison of two selected sub-periods displays a considerable consistency between the different methods, although a few methods seem visibly less consistent with the rest. The tales of the demise of the left-right scale seems exaggerated in the case of Danish politics; while policies may change, the underlying dimension seems more or less unchanged

Towards a new online species-information system for legumes

The need for scientists to exchange, share and organise data has resulted in a proliferation of biodiversity research-data portals over recent decades. These cyber-infrastructures have had a major impact on taxonomy and helped the discipline by allowing faster access to bibliographic information, biological and nomenclatural data, and specimen information. Several specialised portals aggregate particular data types for a large number of species, including legumes. Here, we argue that, despite access to such data-aggregation portals, a taxon-focused portal, curated by a community of researchers specialising on a particular taxonomic group and who have the interest, commitment, existing collaborative links, and knowledge necessary to ensure data quality, would be a useful resource in itself and make important contributions to more general data providers. Such an online species-information system focused on Leguminosae (Fabaceae) would serve useful functions in parallel to and different from international data-aggregation portals. We explore best practices for developing a legume-focused portal that would support data sharing, provide a better understanding of what data are available, missing, or erroneous, and, ultimately, facilitate cross-analyses and direct development of novel research. We present a history of legume-focused portals, survey existing data portals to evaluate what is available and which features are of most interest, and discuss how a legume-focused portal might be developed to respond to the needs of the legume-systematics research community and beyond. We propose taking full advantage of existing data sources, informatics tools and protocols to develop a scalable and interactive portal that will be used, contributed to, and fully supported by the legume-systematics community in the easiest manner possible

The Firms Speak: What the World Business Environment Survey Tells Us about Constraints on Private Sector Development

This chapter summarizes the salient results of the World Business Environment Survey (WBES). It shows that important dimensions of the climate for business operation and investment can be measured, analyzed, and compared across countries, and that governance is key to the business environment and investment climate. The survey findings suggest that key policy, institutional, and governance indicators affect the growth of a firm's sales and investment and the extent to which firms operate in the unofficial economy. Further, the paper provides empirical support for some commonly held notions, while challenging others. It suggests a link between taxation, financing, and corruption on the one hand, and growth and investment on the other, and it highlights the costs to economies where the state is captured by a narrow set of private interests