The World Bank Economic Review - Advance Access

Dollar a Day Revisited

Ravallion, M., Chen, S., Sangraula, P. — 2009-06-26

The article presents the first major update of the international $1 a day poverty line, proposed in World Development Report 1990: Poverty for measuring absolute poverty by the standards of the world's poorest countries. In a new and more representative data set of national poverty lines, a marked economic gradient emerges only when consumption per person is above about $2.00 a day at 2005 purchasing power parity. Below this, the average poverty line is $1.25, which is proposed as the new international poverty line. The article tests the robustness of this line to alternative estimation methods and explains how it differs from the old $1 a day line.

Does Education Affect HIV Status? Evidence from five African Countries

de Walque, D. — 2009-06-16

Data from the first five Demographic and Health Surveys to include HIV testing for a representative sample of the adult population are used to analyze the socioeconomic correlates of HIV infection and associated sexual behavior. Emerging from a wealth of country relevant results, some important findings can be generalized. First, successive marriages are a significant risk factor. Second, contrary to prima facie evidence, education is not positively associated with HIV status. However, schooling is one of the most consistent predictors of behavior and knowledge: education level predicts protective behaviors such as condom use, use of counseling and testing, discussion of AIDS between spouses, and knowledge about HIV/AIDS, but it also predicts a higher level of infidelity and a lower level of abstinence.

Liquidity Constraints and Firms' Linkages with Multinationals

Javorcik, B. S., Spatareanu, M. — 2009-06-16

Using a unique data set on the Czech Republic for 1994–2003, this article examines the relationship between a firm's liquidity constraints and its supply linkages with multinational corporations (MNCs). The empirical analysis indicates that Czech firms supplying multinationals are less credit constrained than are nonsuppliers. Closer inspection of the timing of the effect, however, suggests that the result is due to self-selection of less constrained firms into supplying multinationals rather than to the benefits derived from the supplying relationship. As the recent literature finds that productivity spillovers from foreign direct investment (FDI) are most likely to take place through contacts between MNCs and their local suppliers, this finding suggests that well-developed financial markets may be needed to take full advantage of the benefits associated with FDI inflows.

Do Exporters Pay Higher Wages? Plant-level Evidence from an Export Refund Policy in Chile

Kandilov, I. T. — 2009-06-06

The impact of increased export activity on plant wages is estimated in a developing country context. To avoid potential endogenous selection problems, the empirical analysis benefits from exogenous variation in exports induced by a policy experiment—an export subsidy system implemented in Chile in 1986. Analyses using data from a panel survey of Chilean manufacturing establishments show that while the export subsidy had only a modest positive impact on the industrywide relative high-skilled wage, it significantly increased the plant-level relative high-skilled wage in medium-size establishments, which are most likely to take advantage of the subsidy and enter the export market.

Evidence on Changes in Aid Allocation Criteria

Claessens, S., Cassimon, D., Van Campenhout, B. — 2009-06-03

Have donors changed their aid-allocation criteria over the past three decades toward greater selectivity, a frequently stated goal of the international development community? Using data on how 22 donors allocated their bilateral aid among 147 countries over 1970–2004, the article finds that after the fall of the Berlin wall in 1989 and especially in the late 1990s, bilateral aid responded more to poverty and the quality of the policy and institutional environment in the recipient countries. Furthermore, the sensitivity of aid allocation to the country's size and its debt burden has declined over time. These results are robust to different samples and model specifications, various econometric techniques, and alternative measures of institutional quality. While the specific factors causing these changes cannot be identified—these presumably include geopolitical and economic concerns and the many changes in the international aid architecture—donors still differ greatly in their selectivity. This suggests that further, multifaceted reforms are needed to ensure even greater selectivity of aid.

The Determinants of Funding to Ugandan Nongovernmental Organizations

Fafchamps, M., Owens, T. — 2009-03-11

Original Ugandan data collected by the authors are used to examine the determinants of funding to local nongovernmental organizations (NGOs). Success in attracting grants from international donors depends mostly on network effects. NGOs that raise in-kind resources locally tend to be young and managed by someone who is simultaneously employed elsewhere. There is some evidence of crowding out: NGOs that receive grant funding are less likely to obtain resources locally, whether in cash or in kind. But this seems to be primarily the result of selection. Once NGO-fixed effects are controlled for, there is no evidence that NGOs receive less revenue from fees and donation after obtaining a grant. These results suggest that donors regard Ugandan NGOs as subcontractors of their development efforts, not as charitable organizations in their own right.