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Real GDP per capita and capital stock in Cote d'Ivoire grew strongly from 1960 to 1979, but have declined ever since, for twenty-five years. As a result, the country has traveled a full circle from economic success to failure in little more than a generation. What are the long-term factors behind this dismal growth story? Are the Ivorian development problems mostly of recent origin? Or there are more fundamental, economic factors that explain its long term performance? Four principal conclusions are as follows: First, Cote d'Ivoire's long-term growth performance is not fully explained by temporary factors (e.g., CFA overvaluation or recent conflict). Longer term factors such as capital accumulation, productivity, and terms of trade are key to understanding the country's performance as is the policy of specialization in a single commodity--cocoa. Second, the long-term decline in per capita output started well before the currency overvaluation, and at a time of political stability, and is related to a major, secular deterioration in terms of trade that started after 1976. Third, total factor productivity estimates indicate that TFP per capita also grew until it hit a plateau in 1976-78, and then shrank thereafter, despite gains in human capital accumulation. Fourth, Cote d'Ivoire has pursued a policy of specialization in cocoa beans but this bet on a single commodity has ultimately failed. The strategy that brought prosperity during the 1970s resulted in a growth failure when cocoa prices began declining since 1976.

Banks and Banking Reform --- Economic Growth --- Economic History --- Economic Theory and Research --- Emerging Markets --- Exports --- GDP --- GDP Per Capita --- Human Capital --- Macroeconomics and Economic Growth --- Overvaluation --- Poverty Reduction --- Private Sector Development --- Pro-Poor Growth --- Productivity --- Real GDP --- Total Factor Productivity --- Total Factor Productivity Analysis

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June 2000 - When households face the possibility of borrowing constraints in bad times, favorable movements in the permanent component of the terms of trade may lead to higher rates of private savings. Agenor and Aizenman examine the extent to which permanent terms-of-trade shocks have an asymmetric effect on private savings. Using a simple three-period model, they show that if households expect to face binding constraints on borrowing in bad states of nature (when the economy is in a long trough rather than a sharp peak), savings rates will respond asymmetrically to favorable movements in the permanent component of the terms of trade-in contrast with the predictions of conventional consumption-smoothing models. They test for asymmetric effects of terms-of-trade disturbances using an econometric model that controls for various standard determinants of private savings. The results-based on panel data for nonoil commodity exporters of Sub-Saharan Africa for 1980-96 (a group of countries for which movements in the terms of trade have traditionally represented a key source of macroeconomic shocks)-indicate that increases in the permanent component of the terms of trade (measured using three alternative filtering techniques) indeed tend to be associated with higher rates of private savings. This paper is a product of Economic Policy and Poverty Reduction, World Bank Institute. Pierre-Richard Agenor may be contacted at pagenor@worldbank.org.

Arbitrage --- Capital Markets --- Consumers --- Consumption --- Economic Theory and Research --- Emerging Markets --- Exports --- Finance and Financial Sector Development --- Financial Literacy --- Income --- Liquidity --- Macroeconomic Shocks --- Macroeconomics --- Macroeconomics and Economic Growth --- Marginal Utility --- Open Economy --- Permanent Income --- Political Economy --- Prices --- Private Sector Development --- Real GDP --- Real Interest Rate --- Savings --- Trade --- Utility --- Variables --- Welfare

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The author examines the impact of historical global downturns on trade flows. The results provide insight into why trade has dropped so dramatically in the current crisis, what is likely to happen in the coming years, how global imbalances are affected, and which regions and industries suffer most heavily. The author finds that the elasticity of global trade volumes to real world GDP has increased gradually from around 2 in the 1960s to above 3 now. The author also finds that trade is more responsive to GDP during global downturns than in tranquil times. The results suggest that the overall drop in real trade this year is likely to exceed 15 percent. There is significant variation across industries, with food and beverages the least affected and crude materials and fuels the most affected. On the positive side, trade tends to rebound very rapidly when the outlook brightens. The author also finds evidence that global downturns often lead to persistent improvements in the ratio of the trade balance to GDP in borrower countries.

Base year --- Currencies and Exchange Rates --- Debt --- Economic Theory and Research --- Elasticity --- Emerging Markets --- Exports --- Finance and Financial Sector Development --- Financial crises --- Financial crisis --- Forecasts --- Free Trade --- GDP --- Gross value --- Growth rate --- Income --- International Economics & Trade --- International trade --- Inventories --- Law and Development --- Macroeconomics and Economic Growth --- Middle income countries --- Private Sector Development --- Public Sector Development --- Real GDP --- Real income --- Tax revenues --- Trade balance --- Trade Law --- Trade Policy --- Trough --- Value added

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Real GDP and oil prices are decomposed into common stochastic trend and cycle processes using structural time series models. Potential real GDP is represented by the level of the trend component of real GDP. The potential rate of growth of real GDP is represented by the stochastic drift element of the trend component. Cuevas finds that there is a strong association at the trend and cycle frequencies between real GDP and the real price of oil. This association is also robust in the presence of key economic policy variables. From 1970-80, when the underlying annual rate of increase of the real price of oil was 12 percent, the underlying annual rate of increase of potential GDP in Venezuela was 2.6 percent. By contrast, from 1981-2000 when the underlying rate of increase of the real price of oil was -5 percent, the underlying growth rate of potential GDP fell 1.5 percent. However, the strength of association between the underlying growth of oil prices and real GDP has fallen considerably since the early 1980s, suggesting that oil cannot be relied on as an engine for future growth in Venezuela. This paper-a product of the Colombia, Mexico, and Venezuela Country Management Unit, Latin America and the Caribbean Region-is part of a larger effort in the region to encourage research on macroeconomic issues. The author may be contacted at mcuevas@worldbank.org.

Business Cycles --- Climate Change --- Currencies and Exchange Rates --- Debt Markets --- Econometrics --- Economic Fluctuations --- Economic Performance --- Economic Theory and Research --- Emerging Markets --- Energy --- Energy Demand --- Environment --- Exogenous Variables --- Exports --- Finance and Financial Sector Development --- GDP --- Growth Potential --- Growth Rate --- Industry --- Interest --- Interest Rate --- Macroeconomics --- Macroeconomics and Economic Growth --- Markets and Market Access --- Measurement --- Oil and Gas Industry --- Potential Output --- Prices --- Private Sector Development --- Real GDP --- Trade --- Trends --- Unemployment --- Variables

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November 1999 - Land registration in Thailand has significant positive long-run effects on financial development and economic growth. Using an economywide conceptual framework, the author analyzes how land registration affects financial development and economic growth in Thailand. He uses contemporary techniques, such as error correction and co-integration, to deal with such problems as time-series data not being stationary. He also uses the auto-regressive distributed lag model to analyze long lags in output response to changes in land registration. His key findings: Land titling has significant positive long-run effects on financial development; Economic growth responds to land titling following a J curve, by first registering a fall and recovering gradually, thereafter to post a long, strong rally; The quality of land registration services, as measured by public spending on land registration, has strongly positive and significant long-run effects on economic growth. This paper - a product of the Rural Development and Natural Resources Sector Unit, East Asia and Pacific Region - is part of a larger effort in the region to increase the effectiveness of country assistance strategies in the area of property rights and economic development. The author may be contacted at fbyamugisha@worldbank.org.

Banks and Banking Reform --- Climate Change --- Communities & Human Settlements --- Cred Development --- Debt Markets --- Economic Growth --- Economic Historians --- Economic Theory and Research --- Environment --- Equations --- Finance and Financial Sector Development --- Financial Crisis --- GDP Per Capita --- Incentives --- Inequality --- Investment --- Land Use and Policies --- Liquidity --- Macroeconomics and Economic Growth --- Markets --- Natural Resources --- Poverty Reduction --- Private Property --- Pro-Poor Growth --- Productivity --- Property Rights --- Public Sector Economics and Finance --- Real GDP --- Regression Analysis --- Rural Development --- Rural Land Policies for Poverty Reduction --- Theory --- Value --- Variables