Weathering the Storm: The Impact of the East Asian Crisis on Farm Households in Indonesia and Thailand

This article assesses the impact of the East Asian financialcrisis on farm households in two of the region's most affectedcountries. Indonesia and Thailand, using detailed household-levelsurvey data collected before and after the crisis began. Althoughthe nature of the shocks in the two countries were similar,the impact on farmers' income (particularly on distribution)was quite different. In Thailand, poor farmers bore the bruntof the crisis, in part because of their greater reliance onthe urban economy, than did poor farmers in Indonesia. Urban-rurallinks are much weaker in Indonesia. Farmers in both countries,particularly those specializing in export crops, benefited fromthe currency devaluation. Although there is some evidence thatthe productivity of the smallest landholders declined over theperiod in question, it is difficult to attribute this directlyto the financial crisis. At least in Thailand, a rural creditcrunch does not seem to have materialized.      

THE RELATIVE EFFICIENCY OF PRIVATE AND PUBLIC SCHOOLS IN DEVELOPING COUNTRIES

Aside from revenue mobilization, one of the arguments for allowingthe private sector to assume a larger role in the provisionof education is that it would increase efficiency, as administratorsbecome more responsive to the needs of students and their parents.But what is the evidence? Based on case studies that compareprivate and public secondary education in Colombia, the DominicanRepublic, the Philippines, Tanzania, and Thailand, private schoolstudents generally outperform public school students on standardizedmath and language tests. This finding holds even after holdingconstant for the fact that, on average, private school studentsin these countries come from more advantaged backgrounds thantheir public. school counterparts. In addition, preliminaryevidence shows that the unit costs of private schools are lowerthan those of public schools. Although these results cannot,in themselves, be used as arguments for massive privatization,they indicate that governments should reconsider policies thatrestrain private sector participation in education. Furtherresearch is needed to determine whether some teaching and administrativepractices in private schools are applicable to public schools.      

EXPORT PROCESSING ZONES: The Economics of Enclave Manufacturing

Export processing zones (EPZS) are economics enclaves withinwhich manufacturing for export occurs under virtual free tradeconditions. Many developing countries have established EPZSin hopes of reaping economic gains through employment, foreignexchange earnings, and technology transfer. This article studiesthe benefits and costs of EPZS in Indonesia, the Republic ofKorea, Malaysia, and the Philippines and reviews the relationshipbetween the welfare effects of EPZS and the host country's economicpolicies. When the domestic economy is distorted, the EPZ conferslimited welfare gains. Nevertheless, EPZS are far from the "enginesof development" that some countries had initially hoped theywould become.      

THE ECONOMICS OF NATURAL RESOURCE EXTRACTION: A PRIMER FOR DEVELOPMENT ECONOMISTS

As developing countries become major consumers of the globalsupply of commercial energy, it is essential to understand thedeterminants of future energy prices. At the same time, manydeveloping countries are relying on exports of their own naturalresources—tropical hardwoods, oil, tin, gold, and otherminerals—to generate badly needed foreign exchange. Governmentpolicies influence how much of a resource is extracted todayand how much is saved for the future. Flawed policies needlesslywaste precious national wealth.      

Oil, Macroeconomics, and Forests: Assessing the Linkages

How does an oil boom affect the forest cover of tropical oil-exportingcountries? What macroeconomic linkages and policies are decisive?A comparison of research findings on long-run land-use changesin eight tropical developing economies reveals that the directphysical impacts of the oil industry on forests are unquestionablyless than its derived macroeconomic impact. In most cases oilwealth indirectly but significantly protects tropical forests.The core mechanism is that oil rents cause macroeconomic "Dutchdisease" decreasing the price competitiveness of agricultureand logging, strongly diminishing pressures for forest degradationand deforestation. But domestic policy responses to oil wealthare also vital determinants of the forest outcome. When governmentsuse oil wealth for urban spending sprees, this reinforces thecore effect by pulling more labor out of land-using and forest-degradingactivities. When oil revenues finance road construction or frontiercolonization, however, the core forest-protective effect canbe reversed. Repeated currency devaluation and import protectionof land-using domestic sectors also increase pressures on forests.Other international capital transfers, like bilateral credits,aid, or debt relief, can have impacts similar to those of oilwealth, either alleviating pressures on forests or aggravatingspecific forest-detrimental policies. These insights point toforest-friendly safeguards that can realistically be made inthe design of structural adjustment programs, considering theimportant tradeoffs between development and conservation objectives.      

WHAT MAKES RURAL FINANCE INSTITUTIONS SUCCESSFUL?

Providing affordable credit to the rural population has longbeen a prime component of development strategy. Governmentsand donors have sponsored and supported supply-led rural financeinstitutions both to improve growth and equity and to neutralizeor mitigate urban-biased macroeconomic policies. But becauseof high risks, heavy transaction costs, and mounting loan losses,many of the programs have drained state resources to littlepurpose, reaching only a small part of the rural populationand making little progress toward self-sustainability. There are, however, a few success stories. This article reviewsthe policies, modes of operation, incentives, and financialperformance of four publicly sponsored programs in Asia thatare widely perceived to be successful, to find out what economic,social, and institutional factors contributed to their success.      

USING RANDOMIZED CONTROL DESIGNS IN EVALUATING SOCIAL SECTOR PROGRAMS IN DEVELOPING COUNTRIES

Seven case studies—from Bolivia, Colombia, Indonesia,Mexico, Nicaragua, Taiwan (China), and Turkey—demonstratethe feasibility of conducting rigorous impact evaluations indeveloping countries using randomized control designs. Thisexperience, covering a wide variety of settings and social programs,offers lessons for task managers and policymakers interestedin evaluating social sector investments. The main conclusions are: first, policymakers interested inassessing the effectiveness of a project ought to consider arandomized control design because such evaluations not onlyare feasible but also yield the most robust results. Second,the acute resource constraints common in developing countriesthat often make program rationing unavoidable also present opportunitiesfor adopting randomized control designs. Policymakers and programmanagers need to be alert to the opportunities for buildingrandomized control designs into development programs right fromthe start of the project cycle because they, more than academicresearchers or evaluation experts, are in the best positionto ensure that opportunities for rigorous evaluations are exploited.      

Rural Poverty: Old Challenges in New Contexts

Poverty is still a predominantly rural phenomenon. However,the context of rural poverty has been changing across the world,with high growth in some economies and stagnation in others.Furthermore, increased openness in many economies has affectedthe specific role of agricultural growth for rural poverty reduction.This paper revisits an ‘old’ question: how doesgrowth and poverty reduction come about if most of the poorlive in rural areas and are dependent on agriculture? What isthe role of agricultural and rural development in this respect?Focusing on Sub-Saharan Africa, and using economic theory andthe available evidence, the author comes to the conclusion thatchanging contexts has meant that agricultural growth is onlycrucial as an engine for growth in particular settings, morespecifically in landlocked, resource-poor countries, which areoften also characterized by relatively low potential for agriculture.However, extensive market failures in key factor markets andlikely spatial effects give a remaining crucial role for ruraldevelopment policies, including focusing on agriculture, toassist the inclusion of the rural poor in growth and development.How to overcome these market failures remains a key issue forfurther research. JEL codes: O41, Q10, O55     

REACHING THE RURAL POOR THROUGH PUBLIC EMPLOYMENT: Arguments, Evidence, and Lessons from South Asia

With the limited set of policy instruments typically avaiablein the rural sectors of developing countries, imperfect coverageof the poor and leakage ot the nonpoor must be expected fromeven the most well-intentioned poverty alleviation scheme. Oneway to reach the poor more effectively is to build incentivesfor self-selection into the scheme. Labor-intensive rural publicworks projects have the potential to reach and protect the poor,as well as to create and maintain rural infrastructure. Thelimited evidence for South Asia suggests that few nonpoor personswant to participate, and that both direct and indirect transferever, be rapidly dissipated by a badly concevided and executedproject; the details of how project are selected, designed,and financed are crucial to success in both the short and thelong run.      

The Costs and Benefits of Regulation: Implications for Developing Countries

The literature on the benefits and costs of regulation demonstratesthat this issue can be explored systematically using standardeconomic analysis. It also shows that regulation can have asignificant adverse impact on economic growth. Specifically,regulation aimed at controlling prices and entry into marketsthat would otherwise be workably competitive is likely to reducegrowth and adversely affect the average standard of living.In addition, process regulation can impose a significant coston the economy. Nonetheless, social regulations may have significantnet benefits for the average consumer if designed judiciously. There are several policies developing countries might consideradopting to improve their general approach to regulation. Theappropriate regulatory tools and framework will depend on manyfactors, including bureaucratic expertise, resource availability,political constraints, and economic impacts. There is a generalneed to enhance the capability for evaluating regulation atthe local and national levels.      

Idiosyncratic volatility and cross‐sectional stock returns in Southeast Asian stock markets

We examine the role of idiosyncratic risk in five ASEAN markets of Malaysia, Singapore, Thailand, Indonesia, and the Philippines. Our research was motivated by the findings of Ang et al. (2006, 2009) of a ‘puzzling’ negative relation between idiosyncratic volatility and 1‐month ahead stock returns in developed markets and the suggestion of the ubiquity of these results in other markets. In contrast, we find no evidence of an idiosyncratic volatility puzzle in these Asian stock markets; instead, we document a positive relationship between idiosyncratic volatility and returns in Malaysia, Singapore, Thailand, and Indonesia and no relationship in the Philippines. The idiosyncratic volatility trading strategy could result in significant trading profits in Malaysia, Singapore, Thailand, and to some extent in Indonesia. Our study underscores the fact that generalizing empirical results obtained in developed stock markets to new and emerging markets could potentially be misleading.     

THE DEMAND FOR WATER IN RURAL AREAS: DETERMINANTS AND POLICY IMPLICATIONS

Improving the adequacy and quality of water supplies is a priorityfor rural development in developing countries. So far, the strategiesof governments and international donors for tackling the problemhave been supply-driven; the fundamental importance of demandin the selection of appropriate policies has been virtuallyignored. The realization that effective policy and planningmust take into account what the rural clients want and are preparedto pay for was the impetus for the World Bank's multicountrystudy of households' demand for improved water services. This article summarizes the findings of the 1987–90 investigationof determinants of rural demand in selected regions of LatinAmerica, Africa, and South Asia. The research team used bothdirect (contingent valuation) surveys and indirect (revealedpreference) methods to estimate households' willingness to payfor different levels and types of improvement. The methodologyproduced some illuminating insights into how to decide whatlevel of service is appropriate for a particular community andhow the improved services should be paid for. The team identifiedfour broad categories of village situations, with appropriatepolicies ranging from the provision of house connections atfull cost at one extreme, to no improvement in traditional suppliesat the other extreme.      

The Evolution of the World Bank's Land Policy: Principles, Experience, and Future Challenges

This article examines the evolution of policy recommendationsconcerning rural land issues since the formulation of the WorldBank's "Land Reform Policy Paper" in 1975. That paper set outthree guiding principles: the desirability of owner-operatedfamily farms; the need for markets to permit land to be transferredto more productive users; and the importance of an egalitarianasset distribution. In the 25 years since that paper was published,these guiding principles have remained the same, but it is nowrecognized that communal tenure systems can be more cost-effectivethan formal title, that titling programs should be judged ontheir equity as well as their efficiency, that the potentialof land rental markets has often been severely underestimated,that land-sale markets enhance efficiency only if they are integratedinto a broader effort at developing rural factor markets, andthat land reform is more likely to result in a reduction ofpoverty if it harnesses (rather than undermines) the operationof land markets and is implemented in a decentralized fashion.Achieving land policies that incorporate these elements requiresa coherent legal and institutional framework together with greaterreliance on pilot programs to examine the applicability of interventionsunder local conditions.      

我国农村养老保障事业发展的历程、现状与政策取向研究——基于制度分析的视角

老年人是社会的弱势群体,对这一弱势群体给予特定制度安排,来保障他们的基本生活权益,是国家与社会的基本责任。建国以来,我国农村养老保障除农业合作化和人民公社时期外,一直是土地保障和家庭保障占主导地位。当前,由于我国农村经济转换和社会变革进程加快,农村老年人社会保障制度建设明显滞后于经济社会发展速度,难以满足日益增长的养老需求,导致制度处于非均衡状态。本文在总结分析传统农村养老保障制度建设情况,借鉴国外经验的基础上,提出从“厘定职责,强化政府在农村养老保障体系建设中的主导作用”“立足实际,大力推进居家养老和社区养老”“着眼长远,构建多层次、广覆盖、可衔接的农村养老保障制度体系”三方面入手构建我国农村养老保障体系。     

Productivity Growth and Sustainability in Post-Green Revolution Agriculture: The Case of the Indian and Pakistan Punjabs

This article attempts to determine the long-term productivityand sustainability of irrigated agriculture in the Indian andPakistan Punjabs by measuring trends in total factor productivityfor production systems in both states since the advent of theGreen Revolution. These measurements over time and across systemshave resulted in three major findings. First, there were widespatial and temporal variations between the two Punjabs. Althoughoutput growth and crop yields were much higher in the IndianPunjab, productivity growth was higher by only a small margin.Moreover, the lowest growth in productivity took place duringthe initial Green Revolution period (as opposed to the laterintensification and post–Green Revolution periods) andin the wheat-rice system in both states. The time lag betweenadoption of Green Revolution technologies and realization ofproductivity gains is related to learning-induced efficiencygains, better utilization of capital investments over time,and problems with the standard methods of productivity measurementthat downwardly bias estimates, particularly during the GreenRevolution period. Second, input growth accounted for most ofthe output growth in both Punjabs during the period under study.Third, intensification, especially in the wheat-rice system,resulted in resource degradation in both Punjabs. Data fromPakistan show that resource degradation reduced overall productivitygrowth from technical change and from education and infrastructureinvestment by one-third. These findings imply the need for policiesthat promote agricultural productivity and sustainability throughpublic investments in education, roads, and research and extension;and that reduce resource degradation by decreasing or eliminatingsubsidies that encourage intensification of inputs.      

Income Risk, Coping Strategies, and Safety Nets

Poor rural and urban households in developing countries facesubstantial risks, which they handle with risk-management andrisk-coping strategies, including self-insurance through savingsand informal insurance mechanisms. Despite these mechanisms,however, vulnerability to poverty linked to risk remains high.This article reviews the literature on poor households' useof risk-management and risk-coping strategies. It identifiesthe constraints on their effectiveness and discusses policyoptions. It shows that risk and lumpiness limit the opportunitiesto use assets as insurance, that entry constraints limit theusefulness of income diversification, and that informal risk-sharingprovides only limited protection, leaving some of the poor exposedto very severe negative shocks. Public safety nets are likelyto be beneficial, but their impact is sometimes limited, andthey may have negative externalities on households that arenot covered. Collecting more information on households' vulnerabilityto poverty—through both quantitative and qualitative methods—couldhelp inform policy.      

MACROECONOMIC ADJUSTMENT AND POVERTY IN AFRICA: AN EMERGING PICTURE

The view that macroeconomic adjustment disproportionately hurtsthe poor in Africa has become commonplace. The popular mediaand the nongovernmental aid community frequently express thisview in critiques of Bankfunded economic reform programs. Yetthe evidence on which the claim has been based is flimsy andanecdotal. The emergence of more convincing data, from detailedhousehold surveys in Africa, provides an opportunity to setthe record straight. The evidence from six African countries reviewed in this articledemonstrates that poverty was more likely to decline in thosethat improved their macroeconomic balances than in those thatdid not. The critical factor is economic growth: the economygrew more rapidly and poverty declined faster in countries thatimproved macroeconomic balances, depreciating the real effectiveexchange rate. Changes in the real exchange rate also immediatelyand favorably affected rural incomes, benefiting the poor bothdirectly and indirectly. But the findings also highlighted threecauses for policy concern. First, many African governments haveyet to display a real commitment to macroeconomic reform; second,the poorest of the poor have not benefited from recent growthin some countries; and, third, the prospects for the poor arenot rosy unless there is more investment in human capital andbetter targeting of social spending.      

Promoting Efficient Rural Financial Intermediation

Although governments have traditionally used subsidized creditprograms to promote agricultural growth, this approach has generallyfailed to improve incomes and alleviate poverty in rural areas.It has also led to the mistaken belief that rural credit programscannot be profitable. A new approach seeks to raise standardsof living in rural areas by casting the government in a veryd role—one of setting a favorable legal andpolicy environmentfor rural financial markets and addressing spec market failurescost effectively through well-designed and self-sustaining interventions.There is evidence that this approach can be highly successful.The Village Bank system of Bank Rakyat Indonesia has shown thatfinancial services can be extended to millions of low-incomerural clients without relying on subsidies. Indeed, the programhas generated enormous profits for the bank by using simple,innovative, and largely replicable techniques.      

EVALUATING SOCIAL POLICIES: PRINCIPLES AND U.S. EXPERIENCE

Invariably, studies, proposals, and plans for social programscontain a strong recommendation for evaluation and monitoring.Reliable information about what works and why is clearly vitalfor improving existing programs or designing future ones. Makingsuch assessments requires effective methods of evaluation. Policymakerswho use these evaluations need to know about the methods—the pitfalls to watch for and the relative advantages and disadvantagesof different techniques in different situations. This articledescribes these evaluation methods and the experience accumulatedin the United States in applying them in practice.