Transcript Can South Asia end poverty in a generation?

Overcoming Market and Government
Failures
in India and Africa
Shanta Devarajan
World Bank
http://africacan.worldbank.org
GDP growth in South Asia
has been strong and accelerating
Source: World Development Indicators
Rapid growth is reducing poverty,
but inequality is increasing
Source: Narayan, Ambar, et. al. 2006. “The challenge of promoting equality and inclusion in South Asian countries.” mimeo, World Bank:
Washington DC.
Big gaps between enrolment and
completion in primary education
Source: Schweitzer, Julian. 2006. “Human development in South Asia.” mimeo, World Bank: Washington, DC.
Immunization rates are low and
stagnant
% Immunized
Measles Immunization: 12-23 Months
90
85
80
75
70
65
60
55
50
Bolivia
China
India
Indonesia
Kenya
2000
2001
2002
Year
Source: WDI Indicators Database
2003
2004
For the first time in 20 years, Africa’s growth
is high and accelerating
8
6
4
2
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
-2
1991
0
1990
Annual change in real GDP per
capita (%)
Per capita income
-4
Developing countries
Developing countries, excluding China and India
Sub-Saharan Africa
High-income countries
Africa’s progress on poverty and social outcomes
is uneven
Number of population that will achieve MDGs
20
200
10
100
Number of population, million
Number of countries
Number of countries that will achieve MDGs
0
-10
-20
-30
-40
-50
-100
-200
-300
-400
-500
-600
-700
-800
-60
rty
ve
tr
o
nu
P
al
M
Achieved
0
on
iti
n
io
at
c
G
u
Ed
1 On track
y
lit
rta
r
de
n
e
ld
hi
C
m
o
s
rt h
Bi
2 Off track
Source: Global Monitoring Report, 2007.
W
er
at
n
tio
ti a
n
Sa
al
M
3 Seriously off track
n
io
rit
t
nu
n
tio
ca
u
Ed
4 No data
d
en
G
er
ild
Ch
5
y
lit
ta
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o
m
s
rth
Bi
er
at
W
I. Water in India
24x7 water: A pipe dream?
per capita lpd vs. hours of supply/day
Goa
341
Chandigarh
332
Mumbai
240
Delhi
223
Patna
222
Ludhiana
220
Jodhpur
190
Dasuya
184
Dera Bassi
173
Paris
150
149
Jaipur
Ahmedabad
145
Bikaner
133
Bangalore
123
Gurdaspur
108
Bathinda
106
Bharatpur
105
Udaipur
80
Chennai
32
Source: Data collected from the water boards or utilities
8
10
5
4
10
10
2.5
10
8
24
3
2
1.5
2.5
10
8
1.5
2.5
1.5
Service to the Poor is big business
Politics, patronage, & network
services
POLITICIANS
Operational subsidies
Appointment of directors
Political favours
Untendered contracts
Over-staffing
UTILITY
COMPANY
EMPLOYEES
Poor
quality of
service
Artificially
depressed
tariffs
CONNECTED
POPULATION
CONTRACTORS
UNCONNECTED
POPULATION
High prices
II. Transport in Africa
• Transport corridors
From Teravaninthorn and Raballand,
Transport Prices and Costs in Africa: A
Review of the Main International Corridors,
Directions in Development Series, World
Bank, 2008.
SELECTED
CORRIDORS
OF THE
STUDY
Transport costs are not excessively high in Africa comparing to France for example
Central Africa
East Africa
West Africa
Southern Africa
France
Variable costs (USD per veh-km)
1.31
0.98
1.67
1.54
0.72
Fixed costs (USD per veh-km)
0.57
0.35
0.62
0.34
0.87
Total transport costs
(USD per veh-km)
1.88
1.33
2.29
1.88
1.59
14
11
12
10
5
5
5
Western
Europe – long
distance
AfricaDurbanLusaka
8
AfricaDoualaNdjaména
Africa –
Mombasa
Kampala
2
Africa- Lomé Ouagadougou
0
4
USA
4
2
3.5
Brazil
8
6
China
7
Pakistan
Average transport prices
(in US cents per tkm)
However, average transport prices in Africa are high in a global comparison
Corridor
Gateway - Destination
Price
(USD/ veh-km)
Variable
cost
(USD/veh- km)
Fixed cost
(USD/veh- km)
Average
yearly
mileage
(‘000)
Profit
margin
(%)
Tema/Accra - Ouagadougou
3.53
1.54
0.66
30-40
80%
Tema/Accra - Bamako
3.93
1.67
0.62
40-50
80%
Douala - N’Djaména
3.19
1.31
0.57
60-70
73%
Douala - Bangui
3.78
1.21
1.08
50-60
83%
Ngaoundéré - N’Djaména
5.37
1.83
0.73
20-30
118%
Ngaoundéré - Moundou
9.71
2.49
1.55
10-20
163%
East
Africa
Mombasa - Kampala
2.22
0.98
0.35
130-140
86%
Mombasa - Nairobi
2.26
0.83
0.53
90-100
66%
Southern
Africa
Lusaka - Johannesburg
2.32
1.54
0.34
160-170
18%
Lusaka - Dar-es-Salaam
2.55
1.34
0.44
160-170
62%
West
Africa
Central
Africa
An interesting observation:
On Central Africa corridor, trucks with lower average yearly mileage
have the higher profit margins
West Africa
Central Africa
East Africa
Southern Africa
Not restrictive
Not restrictive
Market entry
Licenses
Not restrictive
Not restrictive
Market access
Bilateral agreement
Yes
Yes
No
Yes
Quotas/freight
allocation
Yes
Yes
No
No
Queuing system
Yes
Yes
No
No
Third country rule
Prohibited
Prohibited
Prohibited
Allowed in some
countries
Technical
regulation (road
user charges, axleload, vehicle
standard, import
restriction)
Problem of
harmonization of
axle-load
regulation
Problem of
enforcement of
axle-load regulation
Problem of
harmonization of axleload regulation, delays
at weighbridges
Prohibition of
second-hand
vehicle imports in
South Africa
Cumbersome
transit procedures
1. Prohibition for trailers
in transit to pick-up
backloads in Kenya
2. Cumbersome transit
procedures inducing
border-crossing delays
Cumbersome transit
procedures inducing
border-crossing
delays
Customs regulation
Cumbersome
transit procedures
inducing bordercrossing delays
Source: Darbera (1998)
350
900
Average transport prices (constant and current) from Mombasa to Kigali
Before liberalization
After liberalization
800
300
700
250
200
500
150
400
300
100
200
50
100
Years
Current transport tariffs (left)
Real transport tariffs - GDP deflator (right)
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0
1989
0
US$/Ton
US$/Ton
600
III. Agriculture in India
Agriculture value added per worker,
1990=100
170
160
China
150
140
Bangladesh
130
120
110
India
100
90
1990
1992
1994
1996
1998
Bangladesh
2000
China
2002
India
2004
2006
Public expenditures in India
7
Percent of Ag. GDP
6
Subsidies
5
4
3
2
Public Investment
1
0
1975-79
1980-84
1985-89
1990-94
1995-99
2000-02
IV. Education in India and Uganda
Percent of Std. 2-5 children who cannot
read or do sums
Percent
70
60
50
40
Level 2 reading
30
20
Subtraction/Division
10
0
Public
Private
All India Teacher Absence Map
(Public Schools)
Teacher
Source: Kremer, Muralidharan, Chaudhury, Hammer, and Rogers. 2004. “Teacher Absence in India.”
State
Absence (%)
Maharashtra
Gujarat
Madhya Pradesh
Kerala
Himachal
Pradesh
Tamil Nadu
Haryana
Karnataka
Orissa
Rajasthan
West Bengal
Andhra Pradesh
Uttar Pradesh
Chhatisgarh
Uttaranchal
Assam
Punjab
Bihar
Jharkhand
Delhi
All India
Weighted
14.6
17.0
17.6
21.2
21.2
21.3
21.7
21.7
23.4
23.7
24.7
25.3
26.3
30.6
32.8
33.8
34.4
37.8
41.9
24.8%
•
•
Teacher Compensation
6,000
6178
4,000
•
2,000
1619
1231
0
Salary in Rs.
5299
Unadjusted
Adjusted
Private
Unadjusted
Public
Adjusted
Definitions
Unadjusted Wage
is the average
wage of teachers in
the public and
private sector
The adjusted wage
is what a 25 year
old female with a
bachelors degree
and a 2-year
teacher training
course residing
locally would earn
in the public and
private sector
Public School Teachers are paid
a (lot) more
No incentives to perform…
Deviation from Mean Salary in Rs
-200
0
200
400
600
Teacher Absenteeism and Compensation
-400
The public sector pays
more absent teachers
more
0
10
20
Days Absent per Month
Private Schools
Salary results are presented as
“deviations from mean”. So the number
200 on the vertical axis means that the person’s salary is
Rs.200 more than the average salary for the sector
30
Public Schools
The private sector pays
more absent teachers
less
The figure is based on a non-parametric
plot of deviations from mean salary against
the number of days absent.
Grants for Primary Education in
Uganda
Primary Education in Uganda
(PETS)
US$ per
Student
3.5
3.0
• In 1995, survey of
250 primary schools
in 19 of 39 districts;
2.5
2.0
1.5
1.0
0.5
0.0
1990
1991
1993
Intended Grant Amount
1994
1995
1999
Received by School (mean)
Absence rate among teachers
Country
Bangladesh
Ecuador
India
Indonesia
Papua New Guinea
Peru
Zambia
Uganda
Rate (percent)
15
14
25
19
15
11
17
27
Uganda: What enumerators found
Can't find teacher,
19.2%
In class, teaching,
18.2%
Out of class, break,
17.6%
Administrative
work, 8.1%
Out of class, in
school, 34.2%
In class, not
teacher, 2.4%
With surveyor,
0.2%
V. Health in India and Chad
Immunization rates are low and
stagnant
% Immunized
Measles Immunization: 12-23 Months
90
85
80
75
70
65
60
55
50
Bolivia
China
India
Indonesia
Kenya
2000
2001
2002
Year
Source: WDI Indicators Database
2003
2004
Distribution of Health Care Subsidies
All India, 1995-6
35
30
25
Hospitals
20
Primary Health
Centers
15
10
5
0
Poorest
II
III
IV
Richest
Source: calculations based on Mahal et. al. 2001 – referred to in MTA para. 2.2.68
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hy as
a th a
P
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C rad
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at sh
is
W
ga
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A
s
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hr e n
a
Pr gal
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K de s
ar
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T a ta
m ka
M il N
ah
a
ar du
as
ht
G ra
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a
H rat
ar
ya
n
Pu a
nj
ab
80
India 2003: Doctor absence from
PHC’s
by state and reason
70
60
50
Official Duty
40
30
20
10
0
Leave
No reason
Quality is low, even when present
(Delhi doctors)
What They Know
0
.1
.2
.3
.4
...And What They Do
Private MBBS
Private, No MBBS
% Asked (DCO)
Public
% Asked (Vignettes)
What they do is in blue, what they know is in red. MBBS
doctors are (roughly) the equivalent of MDs in the US.
Das and Hammer (2005)
Chad
“Although the regional administration is officially
allocated 60 percent of the ministry's non-wage recurrent
expenditures, the share of the resources that actually
reach the regions is estimated to be only 18 percent. The
health centers, which are the frontline providers and the
entry point for the population, receive less than 1 percent
of the ministry's non-wage recurrent expenditures.”
-- Bernard Gauthier and Waly Wane,
“Leakage of public resources in the health sector : An
empirical investigation of Chad,” 2008.
What can be done?
• Information
Grants for Primary Education in
Uganda
Primary Education in Uganda
(PETS)
US$ per
Student
3.5
3.0
• In 1995, survey of
250 primary schools
in 19 of 39 districts;
2.5
2.0
1.5
1.0
0.5
0.0
1990
1991
1993
Intended Grant Amount
1994
1995
1999
Received by School (mean)
Grants for Primary Education in
Uganda
• In 1995, survey of
250 primary
schools in 19 of 39
districts;
• Survey repeated in
1998 and 2000.
Primary Education in Uganda
(PETS)
US$ per
Student
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
1990
1991
1993
Intended Grant Amount
1994
1995
1999
Received by School (mean)
What can be done?
• Information
• Separate public financing from provision
Stipends yield big gains for
Bangladesh secondary education
Source: World Bank. 2006. Bangladesh: Secondary Education Development Support Credit II. World Bank: Washington, DC.
Rwanda: Results-based Financing
Donors
Sub-National
Government
District
National
Government
Results Based Aid
Results Based
Planning and
Budgeting
Results Based
Contracting for
CCT, RB
bonuses
Hospitals, Health Centers
Households
or Individuals
National PBF model for Health Centers
•
•
•
•
•
Learning from 3 pilot experiences (since 2001)
Roll-out since May/June 2006
Currently 23 out of 30 districts covered
Seven control districts
16 Primary Health Care indicators, e.g.
– New Curative Consultation = $0.27
– Delivery at the HC = $3.63
– Completely vaccinated child = $ 1.82
• 14 HIV/AIDS indicators, e.g.
– One Pregnant woman tested (PMTCT) = $1.10
– One couple tested voluntarily (PMTCT)= $1.10
– HIV+ women treated with NVP = $1.10
• Separation of functions between stakeholders
Increase in Volume of Services (after 27 months)
PBF Indicator
Institutional
Deliveries
New Curative
Consultations
ANC: second
dose of TT
Family Planning
new users
Family Planning
users at the
end of the
month
January 2006
average/month/
health center
( 258 health centers
on average)
March 2008
average/month/
health center
(286 health centers
on average)
Percentage increase
(linear/log R2)
21
37.5
985
1,489
21
52.5
15.5
47.9
175.2
711.6
78%
(log 0.75)
51%
(log 0.19)
150%
(log 0.63)
209%
(linear 0.88)
306%
(linear 0.98)
Rwanda 2005-2008
Indicators
Contraception (modern)
Delivery in Health Centers
Infant Mortality rate
Under-Five Mortality rate
Anemia Prevalence : Children
Vaccination : All
Vaccination : Measles
Use of Insecticide treated nets
DHS-2005
10%
39%
86 per 1000
152 per
1000
56%
75%
86%
4%
DHS-2008
27%
52%
62 per
1000
103 per
1000
48%
80.4%
90%
67%
How to end poverty
Market failures
Efficiency & Equity
Government
failure
How to end poverty
Market failures
Efficiency & Equity
Government
failure