PSD Blog - The World Bank Group

Thomas Schelling meets weight loss

Thomas Schelling, one of the fathers of game theory, would be proud. There are now websites that allow people to place bets with themselves over whether they will achieve certain weight loss goals:

Kate Borden, 32, from Lancashire, signed up to one of the diet-betting sites, stickK.com, last November. She wanted to lose a stone in six months. “I just find it tough to motivate myself,” she says. “The only other time I had lost weight was when I had a bet with friends one New Year's Eve. The thought that it was almost a competition with myself and that someone else was the judge did it for me.”

Schelling recognized that people have multiple competing interests - the trick is figuring out how to lock in the choices of your "better self." Betting with yourself might just do the trick. The question is, can we think of any better uses than helping someone get to the gym?

Do banks discriminate against women entrepreneurs?

Some studies such as Carter and Shaw (2006) show that the share of women among the self-employed is disproportionately small, that they run smaller businesses, that they are less likely to rely on venture capital and that their firms have lower debt-equity ratios. These differences in financing patterns could be due to two sorts of factors. First, bankers’ decisions about loan applications may differ across men and women whose businesses are similar in terms of solvency and creditworthiness (supply-side discrimination, associated with the work of economist Gary Becker). Second, male and female entrepreneurs may differ in terms of risk attitude, education, personal wealth, experience, etc., known as statistical discrimination. The challenge is to find out which of these (or both) factors hold.

A recent study by Muravyev et al. (forthcoming) attempts to do precisely this. The study is based on firm level data from the Business Environment and Enterprise Performance Survey (BEEPS, 2005), conducted in Europe and Central Asia by the World Bank’s Enterprise Surveys and EBRD.

A week in open data and visualisation

Looks like there is quite a buzz around open data and data visualisation in the public sector and development world right now. This is what has landed in my inbox just in the last week:

• Google has just released a new search feature that makes it easier to locate and compare public data. (Hat tip: Qian Zhu)

• The UK Department of Communities and Local Government has commissioned a review of potential approaches to visualizing data in the public realm.

What does an inefficient court look like?

I wanted to follow up on Mohammad Amin’s excellent post on the enforcement of laws. One of the papers mentioned in the post is Safavian and Sharma (2007), which finds that laws protecting the rights of creditors are more effective when they can be enforced by efficient courts.

What does it mean to be an inefficient court? Kaplan and Sadka (2008) study this question using data gathered from a labor court in Mexico. In particular, they study cases in which a judge has decided that a worker is entitled to compensation from the firm, typically because the worker was fired without cause.

Dutch Disease vs. Nigerian Disease

Prior to the 1980s, it was believed that natural resource abundance would enable developing countries to make the transition from underdevelopment to industrial “take off”, just as it had done for countries such as Australia and the U.S (Rostow, 1961; Stages of Economic Growth). This view now stands challenged by a number of studies that demonstrate the existence of a “resource curse” – slower growth and poorer economic performance in natural resource rich countries.

The traditional explanation for the resource curse is the Dutch Disease or “deindustrialization”. That is, revenue from natural resources hurts traditional manufacturing through an increase in the exchange rate; also, resources such as labor and capital need to be moved from manufacturing to natural resource production. Most studies on the Dutch Disease stop here although the argument is far from complete.

Equal Pay Day

Today (April 28) is Equal Pay Day in the United States. The date of Equal Pay Day marks the additional amount of time an average woman in the U.S. must work to match the earnings of an average male worker from the previous year. Wait, think you just misread that? Then let me repeat it: to match the earnings of their male counterparts from 2008, women must work from January 2009 to April 2009.

Doubling down on higher education

China could very possibly be setting a record this year with the largest number of unemployed recent college graduates in the history of the world. A recent article in International Higher Education reports that in 2009 "close to 2 million graduates may not find jobs." The article goes on: "in a job fair held by Donghua University, more than 30,000 graduates competed for 1,700 positions provided by foreign firms." In 1999 the Chinese government embarked on an ambitious expansion of its higher education system - just in time for a huge number of students to graduate into the current depressed job market.

Anti-capitalist exploitation of the poor

Tyler Cowen is in top form in his review of the documentary film The End of Poverty:

Given the obvious intent that The End of Poverty should be a film version of a propaganda poster and a recruiting device for a new era of anti-capitalist protest, it verges on embarrassing that, when all is said and done, this film does exactly what it complains about: It exploits and markets poor individuals from the South for the purposes of wealthier people, in this case Western moviemakers, commentators and intellectuals. It is striking how many of the people involved in this film have done very well financially or reputationally by marketing their ideas about the global South.

The film, apparently, bears no relationship to Jeffrey Sachs's book of the same name. (Hat tip: Chris Blattman)

What would Samuel Huntington say about Dev 2.0?

There is little question that the advent of technologies like the mobile phone have been a great boon to economic development around the world. But every new technology brings along with it the potential - or perhaps even the necessity - of disruption. Generally, this kind of disruption is usually a good thing, as it helps break up incumbent (and less efficient) firms, or at the very least forces incumbents to innovate. (I'm thinking, for example, of M-Pesa in Kenya.)

But there is no controlling this kind of process, and the disruptions are not limited to economic life. Social activism gets a boost from these kinds of technologies, and we see everything from an African bloggers conference to highly effective environmental activism. In other words, these technologies hold out a special democratic promise. But therein also lies the risk.

Reformers Club 2009: Stimulating growth in difficult times

For the third year running, the Doing Business team has celebrated the top Doing Business reformers from around the world. The Reformers Club this year includes the following countries: Azerbaijan, Albania, Kyrgyz Republic, Belarus, Senegal, Burkina Faso, Botswana, Colombia, Dominican Republic, and Egypt. Representatives of each country received awards at a ceremony held this Wednesday in Vienna.

While Doing Business reforms are a key part of the development agenda in normal times, the tough global macroeconomic environment has made them all that much more important. Colombian Vice Minister Ricardo Duarte explains why after accepting Colombia's award in the video below. Money quote: "In these difficult times, we are convinced that firms are the engine of our economy. They are the ones that create wealth, that create growth."