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Improving the investment climate is among the top priorities in development. The World Bank Group's Doing Business reports have become an important guide and benchmark to inform regulatory reforms aimed at unleashing the potential of the private sector. This paper discusses the potential role of the Doing Business Indicators in the reform process. Generally, the Doing Business studies are constrained in their prescriptive power for policy making. However, governments that nonetheless choose to use the Doing Business reports for guidance in the reform process can aim to improve their Doing Business ranking to enhance the visibility of their general reform efforts; or they can aim at maximizing the impact of reform on economic growth. In this case, the evidence suggests that focusing on indicators relating to credit and the enforcement of contracts is the most important. Indicators related to cost have the largest potential for fostering growth.

Commercial law.

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Was economic growth in East Asia jobless? This paper addresses this question using data from eight East Asian countries during the period between 1997 and 2011 to estimate the Okun's Law Coefficient, which captures the relationship between growth and employment. The analysis suggests that growth was not jobless. However, there is considerable variation across countries. Generally, the effect of growth on employment tends to magnify under more flexible hiring and firing rules. Yet even where labor markets are more tightly regulated, economic growth affects employment, not necessarily in the aggregate but in its composition. There is evidence that agricultural employment moves counter-cyclically, as opposed to non-agricultural employment. The effect is particularly pronounced in periods of economic crisis, suggesting that agriculture may serve as a shock-absorber for workers laid off in the industrial sector. Isolating non-agricultural employment reveals a stronger relationship between growth and job creation.

Agriculture --- Economic crisis --- Economic growth --- Labor Management and Relations --- Labor Markets --- Labor markets --- Labor Policies --- Labor Standards --- Macroeconomics and Economic Growth --- Okun's Law --- Unemployment --- Work & Working Conditions

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The authors build on the findings from an earlier analysis, adding to the evidence base for the notion that credit rating agencies contribute to fiscal sustainability. To do so, the authors focus on election periods when political pressures for fiscal expansions are heightened. The literature on political budget cycles documents the tendency for budget deficits to increase in election years as governments attempt to appear economically competent by strategically providing additional publicly financed goods or services, or by cutting taxes. A rating downgrade, however, signals the opposite of competence as it implies an increase in the probability of sovereign default. Since credit ratings are widely observed "by financial markets as well as voters" they in effect serve as a disciplining device for fiscal policy not to submit to short-term spending pressures, thus keeping it responsible. The authors find that: (1) governments going into an election year immediately after a rating downgrade are 27 percentage points more likely to lose at the polls; and (2) governments going into an election year with a negative rating outlook (indicating a higher likelihood of a near-term downgrade) run smaller budget deficits compared to cases with positive or stable outlooks. Ratings act like fiscal rules disciplining governments when they are more vulnerable to political pressures on the budget - as opposed to fiscal policies supporting longer-term economic growth and development objectives.

Access to Information --- Bankruptcy and Resolution of Financial Distress --- Bonds --- Creditworthiness --- Currencies --- Debt --- Debt Markets --- Developing Countries --- Economic Development --- Elections --- Expenditures --- Federal Reserve --- Finance and Financial Sector Development --- Financial Crisis --- Financial Institutions --- Fiscal & Monetary Policy --- Fiscal Policy --- Foreign Banks --- Governance --- Gross Domestic Product --- Inflation --- Insurance --- International Financial Institutions --- Macroeconomics and Economic Growth --- Monetary Policy --- Moral Hazard --- Political Economy --- Poverty --- Public Debt --- Securities --- Sovereign Debt --- Taxes --- Transparency

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This paper develops a dynamic spatial equlibrium model of Amazon deforestation, accounting for trade and labor markets dynamics. It uses this model to study the impact of local sectoral shocks and policies on deforestation. Conditional on the assumptions on key parameters, the analysis suggests the following: 1 an increase in external commodity demand increases deforestation; 2 agricultural productivity gains within the Amazon region likely increase deforestation (but reduce deforestation in the rest of the world) 3 manufacturing productivity in urban centers in the Amazon region decreases deforestation, especially if manufacturing firms have short rural value chains and if complemented by investments in education and training and measures to attract skills; 4 reducing transport costs increases deforestation unless it sufficiently supports higher export competitiveness of urban production; and 5 industrial policy focused on raising urban productivity, especially in sectors with short rural value chains, can reduce deforestation. The paper then discusses how policies aimed at increasing local sectoral productivity in the Amazon region could complement other measures specifically aimed at protecting the forest. Among such measures are incentivizing governments to designate undesignated public forests, enforcing forest protection laws (command and control), incentivizing afforestation, and creating alternative livelihoods for farmers in rural and urban areas.

Climate change mitigation.

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The authors build on the findings from an earlier analysis, adding to the evidence base for the notion that credit rating agencies contribute to fiscal sustainability. To do so, the authors focus on election periods when political pressures for fiscal expansions are heightened. The literature on political budget cycles documents the tendency for budget deficits to increase in election years as governments attempt to appear economically competent by strategically providing additional publicly financed goods or services, or by cutting taxes. A rating downgrade, however, signals the opposite of competence as it implies an increase in the probability of sovereign default. Since credit ratings are widely observed "by financial markets as well as voters" they in effect serve as a disciplining device for fiscal policy not to submit to short-term spending pressures, thus keeping it responsible. The authors find that: (1) governments going into an election year immediately after a rating downgrade are 27 percentage points more likely to lose at the polls; and (2) governments going into an election year with a negative rating outlook (indicating a higher likelihood of a near-term downgrade) run smaller budget deficits compared to cases with positive or stable outlooks. Ratings act like fiscal rules disciplining governments when they are more vulnerable to political pressures on the budget - as opposed to fiscal policies supporting longer-term economic growth and development objectives.

Access to Information --- Bankruptcy and Resolution of Financial Distress --- Bonds --- Creditworthiness --- Currencies --- Debt --- Debt Markets --- Developing Countries --- Economic Development --- Elections --- Expenditures --- Federal Reserve --- Finance and Financial Sector Development --- Financial Crisis --- Financial Institutions --- Fiscal & Monetary Policy --- Fiscal Policy --- Foreign Banks --- Governance --- Gross Domestic Product --- Inflation --- Insurance --- International Financial Institutions --- Macroeconomics and Economic Growth --- Monetary Policy --- Moral Hazard --- Political Economy --- Poverty --- Public Debt --- Securities --- Sovereign Debt --- Taxes --- Transparency