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This analysis demonstrates that Brazil, India, and South Africa are far from reaching their full economic potential. In all three countries, aspects of the investment climate which could be improved through reform constrain firms, resulting in lower levels of investment, misallocation of factor inputs, and disincentives to engage in innovation and employee training. In Brazil and India, in particular, changes to tax policy and regulation and improvements in physical infrastructure and public administration will, with a good probability, result in heightened firm-level productivity, increased investment, and higher levels of economic growth. South Africa, meanwhile, has achieved mostly favorable tax and regulatory policies. Firms nevertheless continue to face constraints due to the high cost of skilled labor, the high level of criminal activity, and uncertainty concerning the value of the exchange rate. The nature of the investment climate in Brazil, India, and South Africa is significantly different in each case and, as such, there is substantial scope for learning between the three countries. Taxation in Brazil, for instance, is extremely burdensome, both in administrative and financial terms, a fact that has stemmed from the rigid revenue needs of central and state government. South Africa's experience, where tax revenue was dramatically increased even as tax rates were reduced, is instructive for Brazil. The experience of Brazil in reforming bankruptcy procedures could be instructive to India. Similarly, Brazil and India have much to learn from South Africa in areas of public administration, in improving access to finance and upgrading the quality of physical infrastructure, and in reducing the burden of regulation governing market entry, exit, and the employment of labor. In a number of areas, India has much to impart to Brazil and South Africa. Skilled labor in India is both readily available, which it isn't in Brazil, and relatively inexpensive, which it certainly isn't in South Africa. The stability of India's exchange rate contrasts sharply with the volatility of those of Brazil and South Africa, which again provides another area for mutual learning and assistance. While there is scope for learning from each other, all three countries can also learn from themselves. In Brazil and India, in particular, substantial differences exist between regions in different aspects of the investment climate. In a large share of cases, substantial improvements in the overall investment climate would be observed if all of the states within a country mimicked the policies and performance of the best domestic performer in each category. Thus, while it is important for countries to benchmark themselves against regional and global competitors and set targets accordingly, it is important for them to also look inward and to encourage state and municipal authorities to adopt reforms that have worked particularly well in specific parts of the country

Access to Finance --- Competitiveness and Competition Policy --- Finance and Financial Sector Development --- Fiscal & Monetary Policy --- Infrastructure --- Investment Climate --- Labor Markets --- Macroeconomics and Economic Growth --- Private Sector Development --- Social Protections and Labor --- Taxation & Subsidies --- Trade Policy

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Direct democracy is designed to better align public resource allocation decisions with citizen preferences. Using a randomized field experiment in 250 villages across Afghanistan, this paper compares outcomes of secret-ballot referenda with those of consultation meetings, which adhere to customary decision-making practices. Elites are found to exert influence over meeting outcomes, but not over referenda outcomes, which are driven primarily by citizen preferences. Referenda are also found to improve public satisfaction, whereas elite domination of allocation processes has a negative effect. The results indicate that the use of direct democracy in public resource allocation results in more legitimate outcomes than those produced by customary processes.

Customary decision-making --- Direct democracy --- Housing & Human Habitats --- Macroeconomics and Economic Growth --- Parliamentary Government --- Peri-Urban Communities --- Public resources --- Public satisfaction --- Resource allocation --- Rural Urban Linkages --- Social Accountability

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The 2017 Investment Climate Assessment of Bhutan provides a detailed assessment of firm performance and constraints as they enter, operate, and exit domestic and international markets. The report provides policy recommendations that will support Bhutan to achieve an investment climate conducive to private sector growth, and the creation of productive and gainful employment.

Access to Finance --- Access to Markets --- Agribusiness --- Competitiveness and Competition Policy --- Finance and Financial Sector Development --- Hydropower --- Macroeconomic Management --- Macroeconomics and Economic Growth --- Private Sector Development --- Taxation & Subsidies

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In areas afflicted by civil conflict, development projects can potentially serve an important counterinsurgency function by redressing grievances of marginalized groups and reducing violence. Using a large-scale randomized field experiment in Afghanistan, this paper explores whether the inclusion of villages in the country's largest development program alters perceptions of well-being, attitudes toward government, and violence in surrounding areas. The results indicate that the program generally has a positive effect on all three measures, but has no effects in areas with high levels of initial violence. These findings demonstrate that development programs can buttress government support and limit the onset of insurgencies in relatively secure areas, but that their effectiveness is more constrained in areas where insurgents are already active.

Civil Conflict --- Crisis Management --- E-Business --- Government Legitimacy --- Government Scope --- Housing & Human Habitats --- Labor Policies --- Macroeconomics and Economic Growth --- National Security --- Post Conflict Reconstruction --- Subnational Economic Development --- War --- Afghanistan

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We examine the effect of electoral rules on the quality of elected officials using a unique field experiment which induced randomized variation in the method of council elections in 250 villages in Afghanistan. In particular, we compare at-large elections, with a single multi-member district, to district elections, with multiple single member districts. We propose a theoretical model where the difference in the quality of elected officials between the two electoral systems occurs because elected legislators have to bargain over policy, which induces citizens in district elections to vote strategically for candidates with more polarized policy positions even at the expense of candidates' competence. Consistent with the predictions of the model, we find that elected officials in at-large elections are more educated than those in district elections and that this effect is stronger in more heterogeneous villages. We also find evidence that elected officials in district elections have more biased preferences.

Zonder onderwerpscode: economie