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The Demand for, and Consequences of, Formalization among Informal Firms in Sri Lanka
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Year: 2012 Publisher: Washington, D.C., The World Bank,

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The majority of firms in most developing countries are informal. The authors of this paper conducted a field experiment in Sri Lanka that provided incentives for informal firms to formalize. Offering only information about the registration process and reimbursement for direct registration costs had no impact on formalization. Adding payments equivalent to one-half to one month's profits for the median firm led to registration of around one-fifth of firms. A larger payment equivalent to two months' median profits induced half the firms to register. The main reasons for not formalizing when offered incentives included issues related to ownership of land and concerns about facing labor taxes in the future. The degree of bureaucracy in the registration process also seems to matter for those with the incentive to register, with response to the incentives higher in Colombo, where the registration process was easier, than in Kandy. Three follow-up surveys, at 15 to 31 months after the intervention, measure the impact of formalizing on these firms. Although mean profits increased, this appears largely due to the experiences of a few firms that grew rapidly, with most firms experiencing no increase in income as a result of formalizing. The authors also find little evidence for most of the channels through which formalization is hypothesized to benefit firms, although formalized firms do advertise more and are more likely to use receipt books. In qualitative interviews owners of formalized firms also feel their businesses have more legitimacy. Finally, formalizing is found to result in a large increase in trust in the state. Their focus is largely on the private costs and benefits of existing firms formalizing. Within their sample they cannot measure broader impacts of formalization on other firms (who may prosper from not having to compete against informal firms not paying taxes), nor impacts of easier formalization on entry of new firms. Nevertheless, our results suggest that although most informal firms do not want to formalize, given the current private costs and benefits of formalizing, policy efforts that lead to relatively modest increases in the net benefits of formalizing would induce a sizeable share of informal firms to formalize.


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Federalism and democratisation in Russia
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ISBN: 1526120763 Year: 2002 Publisher: New York : Manchester University Press,

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The collapse of communism in the Soviet Union and Eastern Europe has encouraged political scientists to re-examine the comparative literature on democratisation. A vast literature has now been produced comparing transitions from authoritarianism and democratisation in different parts of the world. However, there are two major omissions in the transition literature. First, the focus of research has primarily been on national level politics, and second, the relationship between federalism and democracy has largely been overlooked. This study seeks to redress this imbalance by moving the focus of research from the national level to the vitally important processes of institution building and democratisation at the local level and to the study of federalism and democratisation in Russia. Federal states are much more difficult to set up than unitary ones, and forging a new federal system at the same time as privatising the economy and trying to radically overhaul the political system has clearly made Russia's transition triply difficult. This book builds on Cameron Ross' earlier work, 'Regional Politics in Russia', by combining theoretical perspectives with empirical work to provide a comparative analysis of the electoral systems, party systems and governmental systems in the ethnic republics and regions and to assess the impact of theses different institutional arrangements on democratisation and federalism. Overall, this study argues that Russia's weak and asymmetrical form of federalism has played a major role in thwarting the consolidation of democracy. Federalism and democratisation in Russia exist in contradiction rather than harmony. In a vicious circle authoritarianism at the centre has been nourished by authoritarianism in the regions and vice versa. 'Elective dictatorships' and 'delegative democracies' are now well entrenched in many republics and authoritarian regimes are firmly established in a majority of the regions. This book will be vital reading for advanced undergraduate and graduate students of Russian politics and democratisation.


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Deals versus rules : policy implementation uncertainty and why firms hate it
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Year: 2010 Publisher: Cambridge, MA : National Bureau of Economic Research,

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"Firms in Africa report "regulatory and economic policy uncertainty" as a top constraint to their growth. We argue that often firms in Africa do not cope with policy rules, rather they face deals; firm-specific policy actions that can be influenced by firm actions (e.g. bribes) and characteristics (e.g. political connections). Using Enterprise Survey data we demonstrate huge variability in reported policy actions across firms notionally facing the same policy. The within-country dispersion in firm-specific policy actions is larger than the cross-national differences in average policy. We show that variability in this policy implementation uncertainty within location-sector-size cells is correlated with firm growth rates. These measures of implementation variability are more strongly related to lower firm employment growth than are measures of "average" policy action. Finally, we show that the de jure measures such as Doing Business indicators are virtually uncorrelated with ex-post firm-level responses, further evidence that deals rather than rules prevail in Africa. Strikingly, the gap between de jure and de facto conditions grows with the formal regulatory burden. The evidence also shows more burdensome processes open up more space for making deals; firms may not incur the official costs of compliance, but they still pay to avoid them. Finally, measures of institutional capacity and better governance are closely associated with perceived consistency in implementation"--National Bureau of Economic Research web site.


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Assessing the Governance of Electricity Regulatory Agencies in the Latin American and the Caribbean Region : A Benchmarking Analysis
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Year: 2007 Publisher: Washington, D.C., The World Bank,

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This paper focuses on an evaluation and benchmarking of the governance of regulatory agencies in the electricity sector in Latin American Countries (LAC). Using a unique database, we develop an index of regulatory governance and rank all the agencies in the LAC countries. The index is an aggregate number of the evaluation of four key governance characteristics: autonomy, transparency, accountability, and regulatory tools, including not only formal aspects of regulation but also indicators related to actual implementation. Based on 18 different indexes, we analyze the positions of agencies with regard to different aspects of their regulatory governance, considering not only performance in each variable but also scores in the different components of each category. This evaluation allows for the identification of particular country shortcomings regarding governance, and indicates needed improvements. Although the region shows an overall good governance design of their regulatory agencies, the implementation of the independent regulator model still faces several challenges. This is particularly evident in political autonomy and in the informal aspects of governance, where the region shows the largest number of countries with the lowest scores. Trinidad and Tobago and Brazil show the best results and Ecuador, Honduras, and Chile the poorest performances. The rest of the countries vary according to the different indexes. We give each governance variable equal weights and positively test the robustness of our approach using Principal Component Analysis.


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A Personal Touch : Text Messaging for Loan Repayment
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Year: 2012 Publisher: Cambridge, Mass. National Bureau of Economic Research

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We worked with two microlenders to test impacts of randomly assigned reminders for loan repayments in the "text messaging capital of the world". We do not find strong evidence that loss versus gain framing or messaging timing matter. Messages only robustly improve repayment when they include the loan officer's name. This effect holds for clients serviced by the loan officer previously but not for first-time borrowers. Taken together, the results highlight the potential and limits of communications technology for mitigating moral hazard, and suggest that personal obligation/reciprocity between borrowers and bank employees can be harnessed to help overcome market failures.


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Can Islands of Effectiveness Thrive in Difficult Governance Settings? : The Political Economy of Local-Level Collaborative Governance
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Year: 2011 Publisher: Washington, D.C., The World Bank,

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Many low-income countries contend with a governance syndrome characterized by a difficult combination of seeming openness, weak institutions, and strong inter-elite contestation for power and resources. In such countries, neither broad-based policy nor public management reforms are likely to be feasible. But are broad-based approaches necessary? Theory and evidence suggest that in such settings progress could be driven by "islands of effectiveness"-narrowly-focused initiatives that combine high-quality institutional arrangements at the micro-level, plus supportive, narrowly-targeted policy reforms. This paper explores whether and how local-level collaborative governance can provide a platform for these islands of effectiveness. Drawing on the analytical framework developed by the Nobel-prize winning social scientist Elinor Ostrom, the paper reviews the underpinnings of successful collaborative governance. It introduces a simple model for exploring the interactions between collaborative governance and political economy. The model highlights the conditions under which coordination is capable of countering threats from predators seeking to capture the returns from collaborative governance for themselves. The relative strength in the broader environment of two opposing networks emerges as key-"threat networks" to which predators have access, and countervailing "trumping networks" on which protagonists of effective collaborative governance can draw. The paper illustrates the potential practical relevance of the approach with three heuristic examples: the governance of schools, fisheries, and road construction and maintenance. It concludes by laying out an agenda for further empirical research, and suggesting what might be the implications of the approach for future operational practice.


Book
Can Islands of Effectiveness Thrive in Difficult Governance Settings? : The Political Economy of Local-Level Collaborative Governance
Author:
Year: 2011 Publisher: Washington, D.C., The World Bank,

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Abstract

Many low-income countries contend with a governance syndrome characterized by a difficult combination of seeming openness, weak institutions, and strong inter-elite contestation for power and resources. In such countries, neither broad-based policy nor public management reforms are likely to be feasible. But are broad-based approaches necessary? Theory and evidence suggest that in such settings progress could be driven by "islands of effectiveness"-narrowly-focused initiatives that combine high-quality institutional arrangements at the micro-level, plus supportive, narrowly-targeted policy reforms. This paper explores whether and how local-level collaborative governance can provide a platform for these islands of effectiveness. Drawing on the analytical framework developed by the Nobel-prize winning social scientist Elinor Ostrom, the paper reviews the underpinnings of successful collaborative governance. It introduces a simple model for exploring the interactions between collaborative governance and political economy. The model highlights the conditions under which coordination is capable of countering threats from predators seeking to capture the returns from collaborative governance for themselves. The relative strength in the broader environment of two opposing networks emerges as key-"threat networks" to which predators have access, and countervailing "trumping networks" on which protagonists of effective collaborative governance can draw. The paper illustrates the potential practical relevance of the approach with three heuristic examples: the governance of schools, fisheries, and road construction and maintenance. It concludes by laying out an agenda for further empirical research, and suggesting what might be the implications of the approach for future operational practice.


Book
Assessing the Governance of Electricity Regulatory Agencies in the Latin American and the Caribbean Region : A Benchmarking Analysis
Authors: --- --- ---
Year: 2007 Publisher: Washington, D.C., The World Bank,

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Abstract

This paper focuses on an evaluation and benchmarking of the governance of regulatory agencies in the electricity sector in Latin American Countries (LAC). Using a unique database, we develop an index of regulatory governance and rank all the agencies in the LAC countries. The index is an aggregate number of the evaluation of four key governance characteristics: autonomy, transparency, accountability, and regulatory tools, including not only formal aspects of regulation but also indicators related to actual implementation. Based on 18 different indexes, we analyze the positions of agencies with regard to different aspects of their regulatory governance, considering not only performance in each variable but also scores in the different components of each category. This evaluation allows for the identification of particular country shortcomings regarding governance, and indicates needed improvements. Although the region shows an overall good governance design of their regulatory agencies, the implementation of the independent regulator model still faces several challenges. This is particularly evident in political autonomy and in the informal aspects of governance, where the region shows the largest number of countries with the lowest scores. Trinidad and Tobago and Brazil show the best results and Ecuador, Honduras, and Chile the poorest performances. The rest of the countries vary according to the different indexes. We give each governance variable equal weights and positively test the robustness of our approach using Principal Component Analysis.


Book
Democratic Republic of the Congo : Joint Staff Assessment of the Interim Poverty Reduction Strategy Paper Preparation Status Report.
Authors: ---
ISBN: 1455289493 1452714266 1283564130 1452777128 9786613876584 Year: 2004 Publisher: Washington, D.C. : International Monetary Fund,

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The attached Joint Staff Assessment (JSA) of the Interim Poverty Reduction Strategy Paper (I-PRSP) Preparation Status Report for the Democratic Republic of the Congo reviews progress with respect to the implementation of the PRSP. The report appropriately points to the continuing progress in the implementation of the I-PRSP, especially the restoration of peace, the strengthening of governance, and the improvement in economic management for pro-poor growth. Progress in the production of monthly budget execution reports and in improving the government accounting framework is good, despite some delays.


Book
Democratic Republic of the Congo : Interim Poverty Reduction Strategy Paper Preparation Status Report.
Authors: ---
ISBN: 1455287474 1452716285 1280977019 1452775109 9786613748621 Year: 2003 Publisher: Washington, D.C. : International Monetary Fund,

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In this paper, the implementation of the activities under the interim poverty reduction strategy and progress toward the elaboration of poverty reduction strategy are described. Institutional framework is strengthened by the creation of the inter-ministerial committee on the implementation of the National Strategy for Poverty Reduction. The goal is to identify priorities and strategies at the community level, and their capacity to operationalize sectoral and thematic poverty reduction strategies. The macroeconomic and financial situation has been stabilized. The poverty reduction strategy budget has been prepared on the basis of detailed cost estimates for each task.

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