Investment, uncertainty and irreversibility

This paper investigates the irreversibility of investments and the impact this has on the nature of the relationship between investment and uncertainty. The empirical analysis uses firm‐level data and is based on a survey of 210 rice‐milling firms in the Mekong River Delta in Vietnam, which was carried out during the year 2000. We show that uncertainty reduces investment of rice millers in the presence of irreversibility, as is predicted by the real options approach to investment. We do not find evidence that the negative association between uncertainty and investment is influenced by the degree of irreversibility.     

Poverty in Palanpur

The meaning and identification of poverty are examined usingthree indicators of standard of living in the North Indian villageof Palanpur. The first is intended as a measure of "apparentprosperity" based on the personal assessments of investigatorsafter intensive field work in the village over the full agriculturalyear 1983–84. The other two are income in 1983–84,and a measure of permanent income obtained by averaging incomesfrom four surveys conducted over a twenty-six-year interval.A comparison of these three indicators shows that income measuredin any one year may give a misleading impression of the incidenceof poverty. The risk of poverty for households is calculated.Vulnerability is high among low-caste households and those whichare involved in agricultural labor. Categories, however, arenot homogeneous; for example, whereas the landless and widowsare more likely to be poor, some of such households are quitewell off. It is argued that poverty in a good agricultural yearis a better indicator of sustained poverty than poverty in abad year. Occupational mobility out of agricultural labor islow, and changes in the distribution of land are largely accountedfor by demographic processes such as household splits.     

On the Unequal Inequality of Poor Communities

Communities differ in important ways in their needs, capacities,and circumstances. Because central governments are not ableto discern these differences fully, they seek to achieve theirpolicy objectives by relying on decentralized mechanisms thatuse local information. Household and individual characteristicswithin communities can also vary substantially. A growing bodyof theoretical literature suggests that inequality within communitiescan influence policy outcomes in ways that are either harmfulor helpful, depending on the circumstances. Until recently,empirical investigations into the impact of inequality havebeen held back by a lack of systematic evidence on community-levelinequality. This study uses household survey and populationcensus data to estimate per capita consumption inequality withincommunities in three developing economies. It finds that communitiesvary markedly in their degree of inequality. It also shows thatthere should be no presumption that inequality is less severein poor communities. The kind of community-level inequalityestimates generated here can be used in designing and evaluatingdecentralized antipoverty programs.     

Small-Scale Industry, Environmental Regulation, and Poverty: The Case of Brazil

Governments and international development agencies have intensifiedefforts to promote small-scale enterprises as an engine of propoorgrowth. In Brazil, however, small-scale industries may alsobe responsible for the bulk of air pollution emissions. Althoughemployees of polluting small-scale industries in Brazil arenot disproportionately poor, simulations suggest that stringentenvironmental regulation resulting in widespread closures ofpollution-intensive small-scale industries would result in anonnegligible increase in poverty among employees of these firms.The results suggest that the enthusiasm for small-scale enterprisesneeds to be tempered by awareness of the potential environmentalcosts imposed by this sector.     

DOES SAMPLE DESIGN MATTER FOR POVERTY RATE COMPARISONS?

Poverty comparisons—an increasingly important starting-point for welfare policy analysis-are almost always based on household surveys. Therefore they require that one be able to distinguish underlying differences in the populations being compared from sampling variation: standard errors must be calculated. This has typically been done assuming that the household surveys are simple random samples. However, household surveys are more complex than this. We show that taking into account sampling design has a major effect on estimated standard errors for well-known poverty measures. In our samples they increase by around one-half. We also show that making only a partial correction for sample design (taking into account clustering, but not stratification, whether explicit or implicit) can be as misleading as not taking any account of sampling design at all.     

Combining Census and Survey Data to Trace the Spatial Dimensions of Poverty: A Case Study of Ecuador

Poverty maps provide information on the spatial distributionof living standards. They are an important tool for policymakers,who rely on them to allocate transfers and inform policy design.Poverty maps are also an important tool for researchers, whouse them to investigate the relationship between distributionwithin a country and growth or other economic, environmental,or social outcomes. A major impediment to the development ofpoverty maps has been that needed data on income or consumptiontypically are available only from relatively small surveys.Census data have the required sample size but generally do nothave the required information. This article uses the case ofEcuador to demonstrate how sample survey data can be combinedwith census data to yield predicted poverty rates for the populationcovered by the census. These poverty rates are found to be preciselymeasured, even at fairly disaggregated levels. However, beyonda certain level of spatial disaggregation, standard errors riserapidly.     

Financing Pharmaceutical Innovation: How Much Should Poor Countries Contribute?

A public economics framework is used to consider how pharmaceuticalsshould be priced when at least some of the research and developmentincentive comes from sales revenues. Familiar techniques ofpublic finance are used to relax some of the restrictions impliedin the standard use of Ramsey pricing. Under the more generalmodel, poor countries should not necessarily cover even theirown marginal costs, and the pricing structure is not relatedto that which would be chosen by a monopolist in a simple way.This framework is then used to examine ongoing debates regardingthe international patent system as embodied in the World TradeOrganization’s Agreement on Trade-Related Aspects of IntellectualProperty Rights.     

An alternative method for quantifying International trade barriers

Zusammenfassung Eine alternative Methode zur Quantifizierung von internationalen Handelshemmnissen. —In diesem Aufsatz wird versucht, eine Methode zur Quantifizierung internationaler Handelshemmnisse zu finden, deren Ergebnisse im Rahmen der internationalen Verhandlungen zum Abbau von Handelsschranken nützlich sind. Zun?chst werden einige frühere Versuche, mit Zoll?quivalenten zu arbeiten, diskutiert. Danach wird das Problem behandelt, welches Kriterium zur Quantifizierung von Handelsschranken geeignet ist. Das Kriterium, das die Bedingungen erfüllt, dürfte die relative Verringerung der importierten Mengen sein. Die Beziehung zwischen diesem Kriterium und dem Zoll?quivalent wird danach untersucht. Es zeigt sich, da\ nur unter sehr restriktiven Annahmen Zoll?quivalente die richtigen Kriterien für den Einflu\ von Handelsschranken sind, wenn man den Ma\stab der relativen Verringerung der Importmengen anlegt. Als n?chstes wird eine alternative Methode entwickelt, mit welcher das erw?hnte Kriterium in me\baren Variablen ausgedrückt ist. Diese Methode basiert wie die der Zoll?quivalente auf der Annahme, da\ Handelsschranken zu Unterschieden zwischen den heimischen Preisen und den Importpreisen führen. Es wurde versucht, diese Methode empirisch anzuwenden. Die Ergebnisse verst?rken die Zweifel im Hinblick auf die Brauchbarkeit der Zoll?quivalente zur Quantifizierung von Handelsschranken. Die Zoll?quivalente tendierten dahin, das Ausma\ der Handelsbeschr?nkungen zu übersch?tzen und gaben nicht immer korrekt die Richtung an, in der die ?nderung der relativen Handelsverminderung stattfand.

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Résumé Une méthode alternative pour la quantification des obstacles en commerce international. —Dans cet article nous essayons de trouver une méthode de quantifier les obstacles en commerce international en arrivant aux résultats qui sont significatifs en cadre des négociations internationales sur le problème de réduire les obstacles en commerce extérieur. Premièrement nous essayons de discuter quelques approches faites récemment qui utilisaient des equivalents tarifaires. Puis nous nous occupons au critérium approprié de quantifier les obstacles en commerce extérieur. Nous pensons que le critérium approprié est la réduction relative de la quantité importée. Puis nous examinons la relation entre ce critérium et l'équivalent tarifaire. Il apparaít que seulement sous les conditions très restrictives les équivalents tarifaires sont des critères corrects pour l'influence des obstacles en commerce extérieur au sens de la réduction relative de la quantité importée. D'abord nous présentons une méthode alternative avec laquelle le critérium est exprimé en variables mesurables. La méthode comme celle des équivalents tarifaires est basée sur la supposition que les obstacles en commerce extérieur mènent aux differences entre les prix locaux et les prix d'importation. Nous appliquons la méthode aux produits pour lesquels les produits locaux et importés sont homogènes. Nous faisons un essai d'appliquer la méthode empiriquement. Les résultats obtenus soulignent les doutes concernant la convenance des équivalents tarifaires pour la quantification des obstacles en commerce extérieur. Les équivalents tarifaires avaient une tendance vers la surestimation de la mesure de restriction de commerce extérieur et n'indiquaient pas toujours la direction du change de la réduction relative du commerce extérieur correctement.

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Resumen Un método alternativo para cuantificar las barreras del comercio internacional. —En este artículo se hizo un esfuerzo por encontrar un método para cuantificar las barreras del comercio internacional, que condujo a resultados que son de importancia dentro del marco de negociaciones internacionales sobre rebajas de barreras comerciales. Primeramente se discuten investigaciones anteriores que han hecho uso de equivalentes de tarifas. En seguida se discute el problema de la búsqueda de criterios adecuados para cuantificar las barreras comerciales. El criterio que se estima que cumple con los requisitos es las reducción relativa de la cantidas importada. Entonces se examina la relación entre este criterio y el equivalente tarifario. Ocurre que solamente bajo condiciones muy restrictivas los equivalentes tarifarios son un criterio correcto para determinar la influencia de barreras comerciales en el sentido de una reducción relativa de la cantidad importada. En seguida se presenta un método alternativo, en el que el criterio mencionado se expresa en variables mensurables. El método, igual que aquél de los équivalentes tarifarios, se basa sobre el supuesto que las barreras tarifarias llevan a diferencias entre precios domésticos y precios de importatión. El método es aplicable a productos en que existe homogenidad entre aquéllos de origen doméstico y aquéllos de origen importado. Se hizo un intento para aplicar el método empiricamente. Los resultados obtenidos refuerzan las dudas sobre la aceptabilidad de los équivalentes tarifarios para la cuantificación de la barreras comerciales. Los équivalentes tarifarios tendían a sobreestimar la influencia de la restrictión al comercio y no indicaban siempre la dirección del cambio de la reducción relativa del comercio correctamente.

     

The impact of privatization on firm performance in a transition economy

The Vietnamese privatization programme, launched in 1992, differs from the usual Western privatization programmes in terms of the residual percentage of shares owned by the state and the portion of shares owned by insiders. This begs the question whether these differences influence the effects of the programme on firm performance. This study measures the impact of privatization on firm performance in Vietnam by comparing the pre‐ and post‐privatization financial and operating performance of 121 former state‐owned enterprises (SOEs). We find significant increases in profitability, sales revenues, efficiency and employee income. Results of applying the ‘difference‐in‐difference’ (DID) method, wherein a control group of firms is used to pick up the influence of other determinants of firm performance, suggest that the performance improvements may indeed be associated with equitization. Regression analyses reveal that firm size, residual state ownership, corporate governance and stock market listing are key determinants of performance improvements.