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Overcoming Market and Government Failures in India and Africa

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Title: Overcoming Market and Government Failures in India and Africa


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, Africas growth
is high and accelerating
7
Africas 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
24
150
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
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13
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.

14
GEOGRAPHICAL SCOPE OF THE STUDY
SELECTED CORRIDORS OF THE STUDY

15
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
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
However, average transport prices in Africa are
high in a global comparison
16
THE TRANSPORT PARADOX IN AFRICA (2) Although low
efficiency, profit margins of trucking companies
are high
Corridor Gateway - Destination Price (USD/ veh-km) Variable cost (USD/veh- km) Fixed cost (USD/veh- km) Average yearly mileage (000) Profit margin ()
West Africa Tema/Accra - Ouagadougou 3.53 1.54 0.66 30-40 80
West Africa Tema/Accra - Bamako 3.93 1.67 0.62 40-50 80
Central Africa Douala - NDjaména 3.19 1.31 0.57 60-70 73
Central Africa Douala - Bangui 3.78 1.21 1.08 50-60 83
Central Africa Ngaoundéré - NDjaména 5.37 1.83 0.73 20-30 118
Central Africa Ngaoundéré - Moundou 9.71 2.49 1.55 10-20 163
East Africa Mombasa - Kampala 2.22 0.98 0.35 130-140 86
East Africa Mombasa - Nairobi 2.26 0.83 0.53 90-100 66
Southern Africa Lusaka - Johannesburg 2.32 1.54 0.34 160-170 18
Southern Africa Lusaka - Dar-es-Salaam 2.55 1.34 0.44 160-170 62

An interesting observation On Central Africa
corridor, trucks with lower average yearly
mileage have the higher profit margins
17
Market regulations in the Africa trucking industry
West Africa Central Africa East Africa Southern Africa
Market entry Market entry Market entry Market entry Market entry
Licenses Not restrictive Not restrictive Not restrictive Not restrictive
Market access Market access Market access Market access 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, axle-load, vehicle standard, import restriction) Problem of harmonization of axle-load regulation Problem of enforcement of axle-load regulation Problem of harmonization of axle-load regulation, delays at weighbridges Prohibition of second-hand vehicle imports in South Africa
Customs regulation Cumbersome transit procedures inducing border-crossing delays 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

18
Example of the impact of market deregulation the
case of France
Source Darbera (1998)
19
Example of the impact of market deregulation the
case of Rwanda
Average transport prices (constant and current)
from Mombasa to Kigali
20
III. Agriculture in India
21

China
Bangladesh
India
22

Public expenditures in India
Subsidies
Public Investment
23
IV. Education in India and Uganda
24
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25
All India Teacher Absence Map (Public Schools)
State Teacher Absence ()
Maharashtra 14.6
Gujarat 17.0
Madhya Pradesh 17.6
Kerala 21.2
Himachal Pradesh 21.2
Tamil Nadu 21.3
Haryana 21.7
Karnataka 21.7
Orissa 23.4
Rajasthan 23.7
West Bengal 24.7
Andhra Pradesh 25.3
Uttar Pradesh 26.3
Chhatisgarh 30.6
Uttaranchal 32.8
Assam 33.8
Punjab 34.4
Bihar 37.8
Jharkhand 41.9
Delhi -
All India Weighted 24.8
Source Kremer, Muralidharan, Chaudhury, Hammer,
and Rogers. 2004. Teacher Absence in India.
26
Public School Teachers are paid a (lot) more
  • 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

27
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 persons 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.
28
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
1994
1995
1990
1991
1993
1999
Intended Grant Amount
Received by School (mean)
29
Absence rate among teachers
Country Rate (percent)
Bangladesh 15
Ecuador 14
India 25
Indonesia 19
Papua New Guinea 15
Peru 11
Zambia 17
Uganda 27
30
Uganda What enumerators found
31
V. Health in India and Chad
32
Immunization rates are low and stagnant
Source WDI Indicators Database
33
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
34
India 2003 Doctor absence from PHCs by state
and reason
35
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)
36
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.

37
What can be done?
  • Information

38
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
1994
1995
1990
1991
1993
1999
Intended Grant Amount
Received by School (mean)
39
Grants for Primary Education in Uganda
Primary Education in Uganda (PETS)
  • In 1995, survey of 250 primary schools in 19 of
    39 districts
  • Survey repeated in 1998 and 2000.

US per
Student
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
1994
1995
1990
1991
1993
1999
Intended Grant Amount
Received by School (mean)
40
What can be done?
  • Information
  • Separate public financing from provision

41
Stipends yield big gains for Bangladesh secondary
education
Source World Bank. 2006. Bangladesh Secondary
Education Development Support Credit II. World
Bank Washington, DC.
42
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
Households or Individuals
Hospitals, Health Centers
43
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

44
Increase in Volume of Services (after 27 months)
PBF Indicator 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)
Institutional Deliveries 21 37.5 78 (log 0.75)
New Curative Consultations 985 1,489 51 (log 0.19)
ANC second dose of TT 21 52.5 150 (log 0.63)
Family Planning new users 15.5 47.9 209 (linear 0.88)
Family Planning users at the end of the month 175.2 711.6 306 (linear 0.98)
45
Rwanda 2005-2008
Indicators DHS-2005 DHS-2008
Contraception (modern) 10 27
Delivery in Health Centers 39 52
Infant Mortality rate 86 per 1000 62 per 1000
Under-Five Mortality rate 152 per 1000 103 per 1000
Anemia Prevalence  Children 56 48
Vaccination  All 75 80.4
Vaccination  Measles 86 90
Use of Insecticide treated nets among children less than 5 4 67
Fertility 6.1 children 5.5 children
46
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47
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48
How to end poverty
Government failure
Market failures Efficiency Equity

49
How to end poverty
Market failures Efficiency Equity
Government failure
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