Issue 65, January 2014
The world’s poorest countries would benefit from having more economists poking around
Research output on a given country increases with the country’s population and wealth, yielding
a strong correlation between per-capita research output and per capita GDP: a 10 percent
increase in a country’s per-capita GDP translates into a 3.2 percent increase in the number
published economic research papers. The large number of papers on the U.S. is almost entirely
explained by the fact that the U.S. is both large and rich. Looking at where research is being
published, papers written about the U.S. are 2.5 percentage-points more likely to be published in
the top five economics journals after accounting for authors’ institutional affiliations and the
field of study. This is a large effect because only 1.5 percent of all papers written about countries
other than the U.S. are published in first-tier journals. These results raise questions about
incentives to researchers in terms of their focus in publishing in academic journals, and highlight
the role of development institutions such as the World Bank in ensuring that poorest countries
are not left out of the knowledge generating process.1
Global income distribution and its regional composition have undergone profound change since 1988
Changes in individual real per-capita incomes between 1988 and 2008, as reflected in the global
Gini index, brought its value down from 72 to about 70.5 points. However, when adjusted for
likely under-reporting of top incomes in national household surveys the estimate for the global
Gini was nearly 76 percent. With that adjustment, the downward trend in the Gini almost
disappears. The evolution of the country-deciles (in every country, the income distribution is
split into 10 groups—deciles—and every person is assigned the average income of his or her
income decile) shows the underlying elements driving changes in the global distribution. For
example, China has graduated from the bottom ranks, modifying the overall shape of the global
income distribution so that instead of two peaks it now has only one, and creating an important
global “median” class. The “winners”, with their real incomes almost doubling, were countrydeciles that in 1988 were around the median of the global income distribution, 90 percent of
whom are in Asia. The “losers”, with real income gains of only 20 percent over 20 years, were
the country-deciles that in 1988 were around the 85th percentile of the global income
distribution, almost 90 percent of whom are from developed countries.2
Economic agglomeration is an important factor in job growth
The business environment and economic agglomeration affect job creation, but which is more
important? Holding constant conventional determinants of firm growth in a worldwide firm
survey, such as firm ownership, size, and age, the analysis finds that economic agglomeration is
most important, especially modern telecommunications, access to export markets, concentration
Das, Jishnu, Quy-Toan Do, Karen Shaines, and Sowmya Srikant. 2013. “U.S. and Them: The Geography of
Academic Research.” Journal of Development Economics 105 (November): 112–30 | Economist Article, January 4,
2014
2
Lakner, Christoph, and Branko Milanovic. 2013. “Global Income Distribution: From the fall of the Berlin Wall to
the Great Recession.” World Bank Policy Research Working Paper 6719, December. | Story | Blog »
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of economic activity in large cities, and capacity agglomeration (the concentration of large firms
in a city). Although the business environment affects job growth less than agglomeration does,
aspects of the business environment that matter include labor flexibility, unionization, local skill
levels, as well as firm size and age.3
Vote-buying: bad for society, but good for the disenfranchised
Vote-buying is pervasive, but not everywhere. What explains the variations across countries in
the greater use of pre-electoral transfers to mobilize voters relative to the use of pre-electoral
promises of post-electoral transfers? This model shows the trade-offs politicians incur when they
decide between mobilizing support with vote-buying or with promises of post-electoral benefits.
Politicians rely more on vote-buying when they are less credible, target vote-buying to those who
do not believe their political promises, and only buy votes from those who would have received
post-electoral transfers in a world of full political credibility. The enforcement of a prohibition
on vote-buying reduces the welfare of those targeted with vote-buying, but improves the welfare
of all other groups in society.4
Why energy intensity has declined in four Chinese industries
Four of China’s most energy-intensive industries—pulp and paper, cement, iron and steel, and
aluminum—all have experienced significant declines in energy intensity (the amount of energy
used per unit of output). While technological change within an industry can influence energy
intensity, so can industry-specific policies and market factors. Unique firm-level data from
China’s most energy-intensive large and medium-size industrial enterprises in each of these
industries between 1999 to 2004 are used to examine how China’s energy-saving programs are
affected by prices, industrial development policies, liberalization of domestic markets, openness
to the world economy, and other policies. Rising energy cost was a significant contributor to the
decline in energy intensity, but China’s industrial policies targeting scale economies—for
example, “grasping the large, letting go of the small”—also contributed to reductions in energy
intensity in these four industries. Other factors such as trade openness had less uniform impacts
on energy intensities in these industries; however, subsidiaries of foreign firms tended to have
lower energy intensities than state-owned firms. The results suggest that even if future energy
prices rise, there will still be a need for continued industrial restructuring in order to achieve
further reductions in energy intensities.5
Affordable solar panels are gaining traction in Bangladesh—and bring many benefits
The Government of Bangladesh, with help from the World Bank and other donors, has provided
aid to a local agency called Infrastructure Development Company Limited and its partner
organizations to devise a credit scheme for marketing solar home system units and making these
an affordable alternative to grid electricity for poor people in remote areas. Household survey
data are used to examine the financing scheme behind the dissemination of these solar home
systems, in particular the role of the subsidy; the factors that determine the adoption of the
Clarke, George, Yue Li, and Lixin Colin Xu. 2013. “Business Environment, Economic Agglomeration and Job
Creation around the World.” World Bank Policy Research Working Paper 6706, November.
4
Hanusch, Marek, and Philip Keefer. 2013. “Promises, Promises: Vote-Buying and the Electoral Mobilization
Strategies of Non-Credible Politicians.” World Bank Policy Research Working Paper 6653, October.
5
Fisher-Vanden, Karen, Yong Hu, Gary Jefferson, Michael Rock, and Michael Toman. 2013. “Factors Influencing
Energy Intensity in Four Chinese Industries.” World Bank Policy Research Working Paper 6551, July.
3
http://econ.worldbank.org/research
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systems in rural Bangladesh; and the welfare impacts of such adoption. As the subsidy declined,
the demand for solar home systems rose, mostly because of technological developments that
reduced the price to an affordable level. Price still has a statistically significant effect on
adoption—a 10-percent decline in the price of the system increases the overall demand for a
solar panel by 2 percent. Once adopted, a solar home system increases children’s evening study
time, lowers kerosene consumption, and improves health for household members, especially
women, whose decision-making ability in certain household affairs also improves. Finally, the
adoption of solar energy systems increases household consumption expenditure by a small
amount.6
Turkey implemented new trade barriers under the various flexibilities at its disposal
Trade policy commitments to lower import tariffs and to maintain tariffs at low levels entail
short and long-run political-economic tradeoffs. Empirical work examining the relationship
between such commitments and the exercise of trade policy flexibilities is still relatively nascent,
especially for emerging economies. This empirically based assessment looks at ways that Turkey
exercised trade policy flexibilities during the global economic crisis of 2008-11. First, and
despite multilateral and customs union commitments that might limit changes to applied tariffs,
Turkey made changes to both its applied Most Favored Nation and preferential tariffs that
cumulatively affect nearly 9 percent of manufacturing imports and 10 percent of import product
lines. Second, Turkey’s cumulative application of temporary trade barrier (TTB) policies—
antidumping, safeguards and countervailing duties—are estimated to impact an additional 4
percent of imports and 6 percent of product lines by 2011. Other surprising results on Turkey’s
use of flexibilities include extending the duration of previously imposed antidumping and
safeguards beyond expected removal dates, removing one TTB policy over a set of products and
immediately reapplying a different TTB policy, covering lengthy upstream and downstream
segments of important industries, and deepening discriminatory preference margins already
inherent in existing preferential trade agreements.7
Samad, Hussain A., Shahidur R. Khandker, M. Asaduzzaman, and Mohammad Yunus. 2013. “The Benefits of
Solar Home Systems: An Analysis from Bangladesh.” World Bank Policy Research Working Paper 6724,
December.
7
Bown, Chad P. 2013. “Trade Policy Flexibilities and Turkey: Tariffs, Antidumping, Safeguards, and WTO
Dispute Settlement. World Bank Policy Research Working Paper 6322, January.
6
http://econ.worldbank.org/research
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