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Overcoming Market and Government Failures in India and Africa

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.

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Overcoming Market and Government Failures in India and Africa

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  1. Overcoming Market and Government Failures in India and Africa Shanta Devarajan World Bank http://africacan.worldbank.org

  2. GDP growth in South Asia has been strong and accelerating Source: World Development Indicators

  3. 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.

  4. Big gaps between enrolment and completion in primary education Source: Schweitzer, Julian. 2006. “Human development in South Asia.” mimeo, World Bank: Washington, DC.

  5. Immunization rates are low and stagnant Source: WDI Indicators Database

  6. For the first time in 20 years, Africa’s growth is high and accelerating

  7. Africa’s progress on poverty and social outcomes is uneven

  8. I. Water in India

  9. 24x7 water: A pipe dream? per capita lpd vs. hours of supply/day 8 341 Goa Chandigarh Mumbai Delhi Patna Ludhiana Jodhpur Dasuya Dera Bassi Paris Jaipur Ahmedabad Bikaner Bangalore Gurdaspur Bathinda Bharatpur Udaipur Chennai 332 10 240 5 223 4 222 10 220 10 190 2.5 184 10 173 8 150 24 149 3 145 2 133 1.5 123 2.5 108 10 106 8 105 1.5 80 2.5 1.5 32 Source: Data collected from the water boards or utilities

  10. Service to the Poor is big business

  11. Politics, patronage, & network services

  12. 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.

  13. GEOGRAPHICAL SCOPE OF THE STUDY SELECTED CORRIDORS OF THE STUDY

  14. THE TRANSPORT PARADOX IN AFRICA (1) A disconnect between low transport costs but high transport prices Transport costs are not excessively high in Africa comparing to France for example However, average transport prices in Africa are high in a global comparison

  15. THE TRANSPORT PARADOX IN AFRICA (2) Although low efficiency, profit margins of trucking companies are high An interesting observation: On Central Africa corridor, trucks with lower average yearly mileage have the higher profit margins

  16. Market regulations in the Africa trucking industry

  17. Example of the impact of market deregulation: the case of France Source: Darbera (1998)

  18. Example of the impact of market deregulation: the case of Rwanda Average transport prices (constant and current) from Mombasa to Kigali

  19. III. Agriculture in India

  20. China Bangladesh India

  21. Public expenditures in India Subsidies Public Investment

  22. IV. Education in India and Uganda

  23. All India Teacher Absence Map (Public Schools) Source: Kremer, Muralidharan, Chaudhury, Hammer, and Rogers. 2004. “Teacher Absence in India.”

  24. 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

  25. The public sector pays more absent teachers more The private sector pays more absent teachers less No incentives to perform… Teacher Absenteeism and Compensation 600 400 200 Deviation from Mean Salary in Rs 0 -200 -400 0 10 20 30 Days Absent per Month Private Schools Public 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 The figure is based on a non-parametric plot of deviations from mean salary against the number of days absent.

  26. In 1995, survey of 250 primary schools in 19 of 39 districts; Grants for Primary Education in Uganda Primary Education in Uganda (PETS) US$ per Student 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1995 1994 1993 1999 1990 1991 Intended Grant Amount Received by School (mean)

  27. Absence rate among teachers

  28. Uganda: What enumerators found

  29. V. Health in India and Chad

  30. Immunization rates are low and stagnant Source: WDI Indicators Database

  31. Distribution of Health Care Subsidies All India, 1995-6 Source: calculations based on Mahal et. al. 2001 – referred to in MTA para. 2.2.68

  32. India 2003: Doctor absence from PHC’s by state and reason

  33. Quality is low, even when present (Delhi doctors) 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)

  34. 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.

  35. What can be done? • Information

  36. In 1995, survey of 250 primary schools in 19 of 39 districts; Grants for Primary Education in Uganda Primary Education in Uganda (PETS) US$ per Student 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1995 1994 1993 1999 1990 1991 Intended Grant Amount Received by School (mean)

  37. In 1995, survey of 250 primary schools in 19 of 39 districts; Survey repeated in 1998 and 2000. Grants for Primary Education in Uganda Primary Education in Uganda (PETS) US$ per Student 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1995 1994 1993 1999 1990 1991 Intended Grant Amount Received by School (mean)

  38. What can be done? • Information • Separate public financing from provision

  39. Stipends yield big gains for Bangladesh secondary education Source: World Bank. 2006. Bangladesh: Secondary Education Development Support Credit II. World Bank: Washington, DC.

  40. 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

  41. 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

  42. Increase in Volume of Services (after 27 months)

  43. Rwanda 2005-2008

  44. How to end poverty Government failure Market failures Efficiency & Equity

  45. How to end poverty Market failures Efficiency & Equity Government failure

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