What to do when markets and governments fail poor people

Similar documents
10+ Years of PETS What We Have Learned. Ritva Reinikka The World Bank June 19, 2008

Issues in Health Care Financing and Provision in India. Peter Berman The World Bank New Delhi

Rich-Poor Differences in Health Care Financing

Municipal Bonds for Financing Urban Development: Some Thoughts. Sanjay Banerji. Nottingham Business School

Post and Telecommunications

A broken social contract, not inequality, triggered the Arab Spring

JOINT STOCK COMPANIES

Financial year-wise FDI Equity Inflows:

State Government Borrowing: April September 2015

REPORT ON THE WORKING OF THE MATERNITY BENEFIT ACT, 1961 FOR THE YEAR 2010

CHAPTER - 4 MEASUREMENT OF INCOME INEQUALITY BY GINI, MODIFIED GINI COEFFICIENT AND OTHER METHODS.

Bihar Budget Analysis

Insolvency Professionals to act as Interim Resolution Professionals or Liquidators (Recommendation) Guidelines, 2018

EXPORT OF GOODS AND SOFTWARE REALISATION AND REPATRIATION OF EXPORT PROCEEDS LIBERALISATION

Banking Sector Liberalization in India: Some Disturbing Trends

CONTENTS AT A GLANCE DIRECT TAX INDIRECT TAX CORPORATE LAWS

4.4 Building Name 4.5 Block/Sector. 4.8 City 4.9 State Code (Refer to State Code in instructions)

ROLE OF PRIVATE SECTOR BANKS FOR FINANCIAL INCLUSION

FOREWORD. Shri A.B. Chakraborty, Officer-in-charge, and Dr.Goutam Chatterjee, Adviser, provided guidance in bringing out the publication.

14 th Finance Commission: Review and Outcomes. Economics. February 25, 2015

Forthcoming in Yojana, May Composite Development Index: An Explanatory Note

In the estimation of the State level subsidies, the interest rates that have been

... (Please leave one blank box between two words) 2. Permanent Account Number (PAN) of the person (see instructions)

Re-organisation of Field Formations in CBEC in. GST Regime

Note on ICP-CPI Synergies: an Indian Perspective and Experience

Bihar: What is holding back growth in Bihar? Bihar Development Strategy Workshop, Patna. June 18

Analyzing Data of Pradhan Mantri Jan Dhan Yojana

POPULATION PROJECTIONS Figures Maps Tables/Statements Notes

imposed professional Tax. In some states there is no Professional tax. ALOK SINHAL & CO.

CHAPTER VII INTER STATE COMPARISON OF REVENUE FROM TAXES ON INCOME

Banking Ombudsman Scheme, 2006

Two Decades of Geographical Targeting in Food Distribution: Drawing Lessons from an Indian State

International Journal for Research in Applied Science & Engineering Technology (IJRASET) Status of Urban Co-Operative Banks in India

Inclusive Development in Bihar: The Role of Fiscal Policy. M. Govinda Rao

Eligible students have to contact our branches where they have availed/availing loans.

Employment and Inequalities

2011: Annexure I. Guidelines/Norms for Utilization of Funds for conducting Soeio-Economic and Caste Census

11. BANKS. Table 11.1 The table provides data on liabilities and assets relating to the Banking Department and Issue Depar ReserveBank of India.

Sarva Shiksha Abhiyan, GOI

1,14,915 cr GoI allocations for Ministry of Rural Development (MoRD) in FY

Ref : 782/M/ dated 23 rd March To, Commissioner of Commercial Taxes Government of West Bengal 14, Beliaghata Road, Kolkatta

XVII. STATUTORY FINANCIAL CORPORATIONS. TABLE 17.1 INDUSTRIAL FINANCE CORPORATION OF INDIA LTD. FINANCIAL ASSISTANCE TO INDUSTRIES (Rs.

FEE RULES. o Samples/models actual cost; o Postal charges additional; o Inspection of records 1st hour free and Rs 5 for each subsequent 15 mins.

January, 2016 Vol 5 Issue 2

German Investments in India

Customers perception on Pradan Manthri Jan Dhan Yojana in Shivamogga District of Karnataka State, India.

DF-3 Capital Adequacy- Qualitative Disclosure

Fiscal Responsibility Legislation in Indian States

I. FDI INFLOWS. A. CUMULATIVE FDI INFLOWS (equity capital components only): B. FDI INFLOWS DURING CURRENT FINANCIAL YEAR :

THE INDIAN HOUSEHOLD SAVINGS LANDSCAPE

A. CUMULATIVE FDI EQUITY INFLOWS (equity capital components only): B. FDI EQUITY INFLOWS DURING CURRENT FINANCIAL YEAR :

PRODUCTS* AND SERVICES

IJPSS Volume 2, Issue 9 ISSN:

RESERVE BANK OF INDIA (RBI) DEPARTMENT OF CURRENCY MANAGEMENT CITIZENS' CHARTER

National Rural Employment Guarantee Act (NREGA 2005) Santosh Mehrotra Senior Adviser (Rural Development) Planning Commission Government of India

Indian Regional Rural Banks Growth and Performance

Dependence of States on Central Transfers: State-wise Analysis

SOLAR ENERGY CORPORATION OF INDIA LIMITED DRAFT 1000 MW GRID CONNECTED ROOF TOP SOLAR PV SCHEME FOR GOVERNMENT BUILDINGS UNDER CAPEX AND RESCO MODELS

Mediclaim - New Rules with respect to Health Insurance Claims & Third Party Administrators (TPA) issued by Insurance Regulatory Authority (IRDA)

Q4 FY 13. Investor Information

Did Gujarat s Growth Rate Accelerate under Modi? Maitreesh Ghatak. Sanchari Roy. April 7, 2014.

Investor Presentation March-2014

GOVERNMENT OF INDIA MINISTRY OF HOME AFFAIRS LOK SABHA UNSTARRED QUESTION NO. 2557

Parallel Session 5: FDI and development

1,07,758 cr GoI allocations for Ministry of Rural Development (MoRD) in FY

Investor Presentation

A Study of Corruption for Issuing Aadharr Card in India by Using Mathematical Modeling

Study-IQ education, All rights reserved

Total Sanitation Campaign GOI,

Q2 FY 12 INVESTOR PRESENTATION

West Bengal Budget Analysis

IJMIE Volume 2, Issue 8 ISSN:

Renewable Energy Certificates: Inches Away From Implementation

Investor Presentation Q3 FY 12

ROAD DEVELOPMENT IN INDIA

Public Distribution System in India A few suggestions

(up dated up To May 2006) I. FDI INFLOWS: 13,635 3,057 up to May ,921 1,587 up to May 2005 %age growth over last year

(up dated up To June 2006) I. FDI INFLOWS: 16,040 3,582 up to June (up to June 2005) 8,070 1,851

Most important Terms And Conditions (MITC) Last Updated on 07 th June 2018

GOVERNMENT OF INDIA MINISTRY OF AGRICULTURE AND FARMERS WELFARE DEPARTMENT OF AGRICULTURE, COOPERATION AND FARMERS WELFARE

A Class 2 Digital Signature Certificate is available for download after verification based on a trusted and pre-verified database.

Odisha Budget Analysis

PORTFOLIO OPTIMIZATION FOR OPEN ACCESS CONSUMERS/DISCOMS

79,686 cr GoI allocations for the Ministry of Human Resource Development (MHRD) in FY

-Empanelment of Chartered Accountant Firms for post-sanction monitoring and follow up for assistance provided by MUDRA to various lending institutions

What constrains business? The role of the Single Window in Gujarat, India

GST Concept and Design

CRISIL SME Ratings: Facilitating Growth and Access to Finance for MSMEs

Self Help Groups, Eradication of Poverty and Inclusive Growth

Karnataka Budget Analysis

Delhi Budget Analysis

INDIA FINANCIAL SERVICES USE AND EMERGING DIGITAL PATHWAYS

TAMILNADU STATE FINANCES

No. Fin.(Pen)B(10)-6/98-III Government of Himachal Pradesh Finance (Pension) Department ******* Dated: Shimla , the OFFICE MEMORANDUM

STATE DOMESTIC PRODUCT

Subject: Allocation of foodgrains under Welfare Institutions and Hostels Scheme

GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION INCOME-TAX

AN EVALUATION OF FINANCIAL INCLUSION

National Level Government Health Sector Expenditure Analysis - 29 states ( )

MFIN MicroMeter. June, 2012

Transcription:

What to do when markets and governments fail poor people Shanta Devarajan World Bank www.brookings.edu/futuredevelopment

Market failures and their solutions Area Market Failure Intervention Trade and industrialization Learning-by-doing externalities (infant industry) Import tariffs and quotas Infrastructure Public goods Public investment, subsidized or free services Health and Education Externalities Free, public provision

Government failures 1. Trade and industrialization: Cronyism

Net employment creation in Tunisia, 1997-2010 Job gains Job losses Source: World Bank, The Unfinished Revolution, Tunisia Development Policy Review, September 2014.

Source: The Economist.

Regulations favored connected firms in Tunisia Ben Ali firms Other firms N Mean Sum (USD) N Mean Sum (USD) Ben Ali Share of Total L 127 66 8,392 112309 9 1,036,610 0.80% Y 122 16,980,822 2,071,660,240 307430 225,300 62,512,270,119 3.20% Net Profits 122 1,908,925 232,888,796 96859 11,090 1,074,153,638 21.30% Gross Profits 122 2,811,035 342,946,258 96859 54,320 5,261,372,574 6.80% Gross Losses 122-902,110-110,057,441 96859-43,230-4,187,219,068 2.70% Note: USD:TND exchange rate1:1.5146, data for 2010, L=wage workers, Y=output, Net profits=pre-tax profits declared to the tax authorities (all firms), gross profits=pre-tax profits declared to the tax-authorities only for firms for whom this is positive. Gross losses=tax profits declared to the tax authorities only for firms for whom this is negative. Source: Rijkers, Freund and Nucifora, All in the family: State capture in Tunisia, 2014.

Government failures 1. Trade and industrialization: Cronyism 2. Infrastructure: Political patronage A. Water in India

Water quality in India is getting worse Estimated hours of supply per day in selected Indian cities, 1980s-2000s 10-15 Chennai 20-24 Bangalore 24 hours 24 hours 8-10 1.5 5-10 4-2 1980s 1990s 2000s 15-24 Hyderabad 20-24 Vizag 24 hours 24 hours 1-5 1-2 10-12 4-1 Source: Interview ASCI.

24x7 water: A pipe dream? Goa Chandigarh Mumbai Delhi Patna Ludhiana Jodhpur Dasuya Dera Bassi Paris Jaipur 341 332 240 223 222 220 190 184 173 Ahmedabad 145 Bikaner 133 Bangalore 123 Gurdaspur 108 Bathinda 106 Bharatpur 105 Udaipur 80 Chennai 32 per capita lpd vs. hours of supply/day 8 150 149 10 5 4 10 10 2.5 10 8 24 3 2 1.5 2.5 10 8 1.5 2.5 1.5 Source: Data collcted from he water boards or utilities.

Service to the poor is big business

Government failures 1. Trade and industrialization: Cronyism in Tunisia 2. Infrastructure: Political patronage A. Water in India B. Roads in Africa

Selected corridors of the study

Transport prices - most expensive in the world Transport Cost 1 Central Africa East Africa West Africa Southern Africa France Total Cost 1.88 1.33 2.29 1.88 1.59 11 7 8 Transport Prices 2 4 5 5 5 1. USD per veh-km; 2. US cents per tkm

Profit margins Accra-Bamako 80% Ngaoundere-N'Djamena 118% Mombasa-Nairobi 66% Mombasa - Kampala 86%

Example of the impact of market deregulation The case of Rwanda Average transport prices (constant and current) from Mombasa to Kigali

Government failures 1. Trade and industrialization: Cronyism in Tunisia 2. Infrastructure: Political patronage A. Water in India B. Roads in Africa 3. Health and Education in India and Africa: Distorted incentives in the public sector

In India, student learning levels are declining Source: Annual Survey of Education Results, 2014.

All India teacher absence map (Public Schools) Source: Kremer, Muralidharan, Chaudhury, Hammer, and Rogers. 2004. Teacher Absence in India. Teacher State Absence (%) Maharashtra 14.6 Gujarat 17.0 Madhya Pradesh 17.6 Kerala 21.2 Himachal Pradesh 21.2 Tamil Nadu 21.3 Haryana 21.7 Karnataka 21.7 Orissa 23.4 Rajasthan 23.7 West Bengal 24.7 Andhra Pradesh 25.3 Uttar Pradesh 26.3 Chhatisgarh 30.6 Uttaranchal 32.8 Assam 33.8 Punjab 34.4 Bihar 37.8 Jharkhand 41.9 Delhi - All India Weighted 24.8%

0 Salary in Rs. 2,000 4,000 6,000 Public school teachers are paid a (lot) more Teacher Compensation 6178 Definitions 5299 Unadjusted Wage is the average wage of teachers in the public and private sector 1231 1619 The adjusted wage is what a 25 year old female with a bachelors degree and a 2-year teacher training course residing locally would earn in the public and private sector Unadjusted Adjusted Unadjusted Adjusted Private Public

-400-200 0 200 400 600 Deviation from Mean Salary in Rs Teacher absenteeism and compensation The public sector pays more absent teachers more The private sector pays more absent teachers less 0 10 20 30 Days Absent per Month Private Schools Public Schools The figure is based on a nonparametric plot of deviations from mean salary against the number of days absent. Salary results are presented as deviations from mean. So the number 200 on the vertical axis means that the person s salary is Rs.200 more than the average salary for the sector

Leakage of resources in health Country (year) % of cash/in-kind resources leaked Resource Category Kenya (2004) 38 Non-salary budget Tanzania (1991) 41 Non-salary budget Uganda (2000) 70 Drugs and supplies Ghana (2000) 80 Non-salary budget Chad (2004) 99 Non-salary budget Source: Gauthier (2006).

23

What is to be done?

Unbundling government failure Principal Citizens Political Leaders Public Officials Agent Political Leaders Public Officials Frontline Providers

Grants for primary education in Uganda US$ per Student 3.5 Primary Education in Uganda (PETS) In 1995, survey of 250 primary schools in 19 of 39 districts; Survey repeated in 1998 and 2000. 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1990 1991 1993 1994 1995 1999 Intended Grant Amount Received by School (mean)

How citizen engagement affects the principal-agent relationships Healthy citizen engagement: Leaders selected and sanctioned based on performance in delivering public goods Unhealthy citizen engagement: Leaders selected on basis of providing private goods (vote buying, etc.). Citizens Political Leaders Accountable leaders *Diminished accountability and citizens expectations on performance. *Special interests capture leaders. Political Leaders Public Officials Public Officials Frontline Providers Selected public officials are accountable Public officials selected with incentive to monitor providers *Incentives and norms within public bureaucracies distorted. *Leaders legitimacy compromised. *Jobs as political patronage. *Providers not monitored (absenteeism, etc.) *Local elites capture civil society and «invert» principal-agent relationship

How to move from unhealthy to healthy citizen engagement Global shift toward democratic institutions for political engagement, 1980-2013

How to move from unhealthy to healthy citizen engagement (cont d) Transparency In order to decide how to vote in the upcoming elections, how much more information would you like to have?

Correlation between media freedom and corruption

What kind of transparency is most effective? Impartial, reliable and specific information about performance of leaders in delivering public goods Timely to the political process Communicated through competitive media markets

Has Anyone Heard of the VEC? Villagers Who Don't Know of a Village Education Committee Villagers Who Think there is a VEC 92.4% 7.6% 5.0% 1.1% 1.5% Villagers Who Believe there is a VEC, But Can't Name Any VEC Members Villagers Who Can Name Only One or Two VEC Members (the Pradhan and/or Headmaster) Villagers Who Can Name More VEC Members than Just the Pradhan and Headmaster * Based on 2,803 household surveys in 4 random blocks in the District of Jaunpur, UP. Each household is weighted by total number of households in village divided by number households surveyed in village.