The effects of tax instability on budgeting and financial management in developing countries

Budgeting and financial management in developing countries is made particularly difficult by fluctuations in revenues. This paper considers the variety of factors that underlie such revenue variability, including policy, economic and administrative phenomena. Empirical analysis of government revenue in stability in both Bangladesh and Burk in a Faso is conducted to document the extent of the issue and to suggest how such analysis can shed light on the underlying causes of revenue fluctuations.     

Teenage fertility in developing countries

Perhaps one of the most pervasive phenomena among teenaged females today is “teenage fertility”. The purpose of this article is to describe teenage fertility as it relates to developing countries. The study attempts to pose the problem by considering a large number of developing nations for which data are available and by describing the levels and trends in teen fertility rates.     

Financial liberalization in developing countries

This article shows that higher interest rates increase the extent of financial intermediation while increased financial intermediation raises the rate of economic growth. Further, increases in interest rates have favorable effects on investment efficiency and on economic growth. It is noted, however, that excessively high interest rates will have unfavorable economic effects. Such a situation can be avoided if the liberalization of the banking system takes place under conditions of monetary stability accompanied by the government supervision of banks. Bela Balassa has been professor of political economy at the Johns Hopkins University and consultant at the World Bank since 1966. His recent books includeNew Directions in the World Economy (Macmillan, 1989) andComparative Advantage, Trade Policy and Economic Development (Harvester Wheatsheaf, 1989).     

Crises and unpredictability in developing countries

Developing countries have suffered most of the financial crises in the context of the process of economic and financial globalisation. Both current and previous crises have revealed that unpredictability is a feature common to all the episodes which occurred during the process of globalisation. Although certain alarms went off, any of those external financial crises were actually predicted by the advanced methods in use for prediction and country risk analysis. Taking into consideration the information above, the aim of this paper is to check the ability to foresee external financial crises in developing countries of both the country risk index published by Euromoney and the Credit Ratings variable included therein. We have focused on the external financial crises that took place between 1992 and 2011, that is, in a full globalisation era. The results are negative. It appears that neither the index nor the sovereign ratings are able to reflect early enough the vulnerabilities that arise previously to the setting off the crisis episodes. This leads us to conclude that the existing models of country risk have limits. Thus, it would necessary to develop new instruments to measure this risk, considering uncertainty as an essential feature of the current economic and financial environment.     

Privatisation and economic growth in developing countries

This article re-examines the relation between privatisation and economic growth. Previous studies that have attempted to measure this relationship have concluded that privatisation has had a sizeable positive effect on economic growth. Our study uses data for 63 developing countries over the time period 1988–97. It uses the framework of an extreme-bounds analysis (EBA) to conduct a cross-country growth regression analysis. Our findings contradict earlier results, but reaffirm the view that effective competition and its regulation may need to accompany privatisation to make a positive impact on economic growth.     

The impact of tax structures on deficits: tax elasticity and fiscal illusion in sixteen oecd countries

This paper represents the first systematic attempt to link revenue structure to deficits cross-nationally. Recent analyses of the causes of increased budget deficits in the industrialized countries have focused on the factors that influence government spending, ignoring the possibility that chronic deficits might also be caused by shortfalls in revenue. In this research, using data from sixteen OECD countries during the period 1959-1990, we test hypotheses regarding the linkage between a country's revenue structure and its experience with deficits. We find evidence that countries heavily dependent on direct taxes had more difficulty keeping spending and revenues in line, particularly during times of high unemployment. We find no evidence, however, of a “fiscal illusion” impact on deficits.     

Privatization in developing countries: ideal and reality

In both developed and developing countries, governments finance, produce, and distribute various goods and services. In recent years, the range of goods provided by government has extended widely, covering many goods which do not meet the purist's definition of “public” goods. As the size of the public sector has increased steadily there has been a growing concern about the effectiveness of the public sector's performance as producer. Critics of this rapid growth argue that the public provision of certain goods is inefficient and have proposed that the private sector replace many current public sector activities, that is, that services be privatized. Since Ronald Reagan took office greater privatization efforts have been pursued in the United States. Paralleling this trend has been a strong endorsement by international and bilateral donor agencies for heavier reliance on the private sector in developing countries.

However, the political, institutional, and economic environments of developing nations are markedly different from those of developed countries. It is not clear that the theories and empirical evidence purported to justify privatization in developed countries are applicable to developing countries.

In this paper we present a study of privatization using the case of Honduras. We examine the policy shift from “direct administration” to “contracting out” for three construction activities: urban upgrading for housing projects, rural primary schools, and rural roads. The purpose of our study is threefold. First, we test key hypotheses pertaining to the effectiveness of privatization, focusing on three aspects: cost, time, and quality. Second, we identify major factors which affect the performance of this privatization approach. Third, we document the impact of privatization as it influences the political and institutional settings of Honduras. Our main finding is that contracting out in Honduras has not led to the common expectations of its proponents because of institutional barriers and limited competitiveness in the market. These findings suggest that privatization can not produce goods and services efficiently without substantial reform in the market and regulatory procedures. Policy makers also need to consider carefully multiple objectives at the national level in making decisions about privatization.     

Review article: Urban problems in developing countries

The Urban Informal Sector: critical perspectives on employment and housing policies. Edited by Ray Bromley, Oxford: Pergamon. 1979. (First published in 1978 in World Development Vol 6 No 9 pp 1031–1200). £12.00

Casual Work and Poverty in Third World Cities. Edited by Ray Bromley & Chris Gerry, Chichester: John Wiley. 1979. 323 pp. £13.50

Urbanisation and Urban Growth in the Caribbean: an essay on social change in dependent societies. Malcolm Cross, Cambridge University Press. 1979. 174 pp. £10.50. £3.95 pb

People and Housing in Third World Cities: perspectives on the problem of spontaneous settlements. D J Dwyer, New York: Longman. 1979. (First published in 1975). 286 pp. £4.95 £4.95 pb

Urbanisation and Social Change in West Africa. Josef Gugler & William G Flanagan, Cambridge University Press. 1978. 235 pp. £10.00. £3.95 pb

Urban Development in the Third World: policy guidelines. John D Herbert, New York: Praeger. 1979. 238 pp. £12.25

Urbanisation in Papua New Guinea: a study of ambivalent townsmen. Hal B Levine & Marten Wolfzhan Levine, Cambridge University Press. 1979. 161 pp. £8.95. £3.95 pb

Networks and Marginality: life in a Mexican shantytown. Larissa Adler Lomnitz, London: Academic Press. 1977. (First published in Spanish in 1976.) 230 pp. £13.65

Million Cities of India. Edited by R P Misra, New Delhi: Vikas. 1978. 405 pp. £10.95

The Management of Squatter Upgrading: a case study of organisation, procedures and participation. David Pasteur, Farnborough, England: Saxon House. 1979. 232 pp. £11.50

Cities of Peasants: the political economy of urbanisation in the Third World. Bryan Roberts, London: Edward Arnold. 1978. 207 pp. £4.50 pb

An Urban Profile of the Middle East. Hugh Roberts, London: Croom Helm. 1979. 239 pp. £14.95

Urban Planning in Rich and Poor Countries. Hugh Stretton, Oxford University Press. 1978. 220 pp. £4.50. £2.25 pb

Manchester and Sao Paulo: problems of rapid urban growth. Edited by John D Wirth & Robert L Jones, Stanford: Stanford University Press. 1978. 234 pp. np

Housing Asia's Millions: problems, policies and prospects for low‐cost housing in Southeast Asia. Edited by Stephen H K Yeh & A A Laquian, Ottawa: International Development Research Centre. 1979. 243 pp. $12.00     

Mickey Mouse numbers and inequality research in developing countries

The usage of unreliable statistics is common in development economics, particularly in research on income distributional issues. It is widely believed, for example, that the distribution of income in Taiwan equalised dramatically between the early 1950s and about 1980. Under close examination it is clear much of the evidence advanced is flawed, the treatment of data by a number of analysts is puzzling, and links between export‐orientation and inequality trends are flimsy. It is argued that economists should be far more concerned about data problems in their research.     

The measurement of agricultural price distortion in developing countries

The most common means of measuring agricultural price distortion in less‐developed countries has been through the estimation of variously‐defined nominal protection coefficients. The objectives of this article are: (a) to demonstrate that the coefficients which have been employed are inadequate for measuring price distortion; (b) to develop a suitable method for measuring distortion at each point on domestic marketing chains; and (c) to demonstrate, using the example of maize in Kenya, the potential magnitude and direction of the differences between the conventional coefficients and the distortion coefficients developed in the article.     

Suicide in developing countries (2): risk factors

The majority of studies on risk factors for suicide have been conducted in developed countries, and less work has been done to systematically profile risk factors in developing countries. The current paper presents a selective review of sociodemographic, clinical, and environmental/situational risk factors in developing countries. Taken together, the evidence suggests that the profiles of risk factors in developing countries demonstrate some differences from those in developed countries. In some developing countries, at least, being female, living in a rural area, and holding religious beliefs that sanction suicide may be of more relevance to suicide risk than these factors are in developed countries. Conversely, being single or having a history of mental illness may be of less relevance. Risk factors that appear to be universal include youth or old age, low socioeconomic standing, substance use, and previous suicide attempts. Recent stressful life events play a role in both developing and developed countries, although their nature may differ (e.g., social change may have more of an influence in the former). Likewise, access to means heightens risk in both, but the specific means may vary (e.g., access to pesticides is of more relevance in developing countries). These findings have clear implications for suicide prevention, suggesting that preventive efforts that have shown promise in developed countries may need to be tailored differently to address the risk factor profile of developing countries.     

Suicide in developing countries (3): prevention efforts

Until now, suicide prevention efforts have been limited in developing countries, although there are pockets of excellent achievement. Various universal, selective, and indicated interventions have been implemented, many of which target a different pattern of risk factors to those in developed countries. In the absence of sufficient mental health services, developing countries rely heavily on nongovernment organizations (NGOs) to provide crisis interventions for suicidal individuals, as well as proactive interventions aimed at raising community awareness and building resilience. Often these NGOs work within a social and public health framework, collaborating with others to provide nested suicide prevention programs that are responsive to local community needs. There is a clear need to develop appropriate, relevant and effective national suicide prevention plans in developing countries, since, to date, only Sri Lanka has done so. These plans should focus on a range of priority areas, specify the actions necessary to achieve positive change in these priority areas, consider the range of collaborators required to implement these actions, and structure their efforts at national, regional, and local levels. The plans should also promote the collection of accurate data on completed and attempted suicide, and should foster evaluation efforts.     

Foreign patent monopolies in developing countries: An empirical analysis

This paper presents data on the patenting practice of patent holders resident in industrialized countries in Africa. It is confined to such patents taken out by Algeria, Libya, Morocco, Tanzania, and the states whose patent legislation is administered by the Office Africain et Malgache de la Propriété Indus‐trielle (OAMPI): Cameroon, Central African Republic, Chad, Congo, Dahomey, Gabon, Ivory Coast, Malagasy Republic, Mauritania, Niger, Senegal, Togo, and Upper Volta. These countries account for nearly four‐fifths of the total patents in force andlor applied for in Africa (excluding Rhodesia and South Africa).¹

In particular, the paper tries to throw some light on the importance of developing countries for foreign patenting, the motivation of foreign patent‐holders to take out patents in these countries, the actual transfer of patented technology, and the reasons for the lack of such a transfer. The paper complements the extensive work on foreign technology and foreign patents in Latin America, especially by C. V. Vaitsos [1972] and the Junta del Acuerdo de Cartagena [1971]. It also seeks to test the theoretical assumption that patents in developing countries support the transfer of technology.²     

Optimal feeder roads in developing countries: The case of Thailand

The economic rationale of the construction of feeder roads in LDC's is that such roads stimulate agricultural activity within the area of influence of the road. Nearly all project reports prepared by contractors stress the probable agricultural benefits of feeder road construction but the evidence of a limited number of post‐construction appraisals suggests that such benefits may be small or nonexistent. It is the purpose of this article to examine the economic theory underlying the possibility (or non‐possibility) of induced benefits. The article concludes with an application of the theoretical results to feeder road construction in Thailand.