Report on the World Bank research program (Vol. 1 of 2) : Part 1

i ~i 4 w & *'skCm me5Vm4ma:a-- 4"' Å pa? 4 . 43åL1 Research Program Part I * ~ Dec2n-!er 1985 "4. Office of the Vice President, Econornics and Research Staff ;2~fj J% 41. I& 4 41'e ddsr uo adrebe db Jf-i 4.' *fü In THE WORLD BANK Wanton. D. C.20433 U.S.A. A.W.MM Ftaie December 3, 1985 NENDRANDUN TQ THE EXECUTIVE DIRECTORS Subject: Bank Group Research Program The attached report represents the twelfth annual review of the socioeconomic research undertaken in the Bank. It covers all research except for that financed under loans and credits or by consortia such as the Consultative Group on International Agricultural Research (CGIAR). The report will be reviewed by the Board on January-L6, 1986. This year's report focuses on the implementation of changes in the administration of research and shifts in the research program in accordance with the new research priorities outlined in Last year's report. The findings and recommendations of the review committee appointed in 1985 by the Research Policy Council to evaluate this reorganization of research management are presented. The report describes the current status of the comparative studies program as well as the new research starts in FY85. The results of a major evaluation of the backlog of completed research projects by the Research Projects Approval Committee are highlighted, and the new initiatives taken by the RPC for the dissemination of research results are described. Finally, the report attempts to put the research program in perspective by discussing the results of past research projects. Part II of the report presents narratives of research projects financed from the Research Support Budget that were ongoing or completed in FY85. FOR OFFICIAL USE ONLY EXECUTIVE SUMMARY This year's Report on the World Bank Research Program has two parts. Part I comprises 1) a summary of the financial and administrative aspects of Bank research; 2) an outline of the objectives of the Bank's research program and new developments in the current portfolio; 3) the results of a major evaluation by the Research Projects Approval Committee (REPAC) of the backlog of completed research projects; 4) initiatives taken to improve the dissemination of Bank research outputs; and 5) an assessment of the research program in perspective, in accordance with the Board's stated desire that this year's report focus on the output and impact-of the research program. Part II provides narratives of research projects financed by the Research Support Budget (RSB) which were ongoing in FY85. A summary of the main findings and issues discussed in this year's report is presented below. I. Finance, Size and Administration of the Research Research in the World Bank is conducted mainly in ERS, OPS and EIS. In FY85, the World Bank devoted a total of $23.1 million to economic and social research, an increase in real terms of 2.6 percent over FY84. The share of research in total Bank administrative expenses has remained constant at 3.5 percent. Research constitutes about one-fifth of the total analytical work undertaken in the Bank in support of its lending activities. Of the total expenditure on research, $4.8 million was funded by a central Research Support Budget. Three important developments took place in the administration of research during FY85. First, to facilitate better coordination between the Regional offices and the research staff responsible for the comparative studies, the Comparative Studies Coordination Committee, consisting of the six Chief Economists and the Research Administrator, was established. Second, REPAC undertook to evaluate the backlog of completed research projects which had not yet been evaluated. Third, the Research Policy Council (RPC) decided to publish two new journals, The World Bank Economic Review and The World Bank Research Observer, and to restyle the Research News. A three-member committee was appointed by the RPC to review the changes in research administration instituted in early 1984, and reported its findings and recommendations on the distribution of research projects; the review process; the size and functions of REPAC and the Bank Research Advisory Group; and the need to change some adverse perceptions of the system. II. The Research Program: Objectives, Priorities and New Developments The Bank's research program continues to be guided by the broad objectives stated in last year's Report: to support all aspects of the Bank's operations; to broaden understanding of the development process; to improve the Bank's capacity to provide advice to member countries; and to assist in developing indigenous research capacity in member countries. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. - ii - Five broad areas have emerged as the most important ones for supporting the Bank's operations and keeping the Bank at the forefront of the economics of developing countries: 1) the costs and benefits of government intervention; 2) the interplay of incentives and institutions; 3) the interaction between developed and developing countries in the world economy; 4) the effect of short-term policies on long-term development; and 5) the role of economic and institutional planning. The new research projects approved in FY85 conform broadly to these priorities. For a few key policy issues, the "Program of Comparative Studies" attempts to develop a common analytical framework for the study of a particular policy question in a number of countries-. The comparative studies thus coincide with the Bank's comparative advantage in research and will reinforce, and be reinforced by, the Bank's policy dialogue with its member countries. Launched in February 1984 with the study on "The Timing and Sequencing of a Trade Liberalization Policy", it now also includes studies on "Agricultural Pricing Policies" and "Poverty, Equity and Growth". Funds to prepare a study on "Macroeconomic Adjustment and Long Run Growth" have now been approved by the RPC in FY85. REPAC developed an agenda of research priorities for sub-Saharan Africa, after eliciting the views of Bank researchers, regional staff, African policymakers and the academic community. Four main areas of inquiry emerged: trade policy, macroeconomic adjustment, public economics, and resource mobilization. Applied research specific to Africa was seen to be important in agricultural pricing policies; the winners and losers of policy change; the fiscal effects of trade reform; the political economy of government expenditure policy; and the reform of public enterprises. Studies on longer-term issues were suggested on designing appropriate family planning programs, the financing of health care, and on the outcomes of past educational policies on appropriate human resource development and their reform. III. Evaluation of Completed Research Projects Under the direction of the RPC, REPAC in FY85 undertook to clear the large backlog of completed research projects which had not yet been evaluated. Projects were classified under six sectoral panels, each under the chairmanship of one or two REPAC members. (The panel reports summarizing the main findings and conclusions at the sectoral level are given in the Annex to Part I of this report). The research program on the whole was judged to have been useful to the Bank. Successful projects mostly used state-of-the-art methodologies, applying them competently to development issues which previously had not been adequately researched. In numerous instances, the project results have been incorporated in the Bank's operational work. Even some projects which were thought to have shortcomings in their research design have been helpful to Bank staff in providing information on, and some implications of, a specific phenomenon. - iii - A number of lessons were drawn from the evaluation. The most serious problem concerned the dissemination of research results. Many interesting and useful research findings remained in unfinished form and were consequently of limited use to the rest of the Bank, poLicymakers and the academic community. Contributing factors include insufficient incentives for Bank staff to convert research output into published products and staff turnover during the often long Lifetime of the project, leading to delays in the completion of projects and difficulties in appropriate dissemination. Further, the evaluation panels recommended both a more forceful effort in the management of research and greater attention to the design of research projects to ensure that policy-relevant questions are included at the proposal stage in order to generate policy-relevant conclusions. Finally, in some projects the researchers had underestimated the difficulties of collecting primary data so that they could put in little time and effort in their analysis. Imaginative use of existing data bases is likely to yield higher and quicker returns in many areas of policy-relevant research. Emphasis is now shifting from long-duration research projects based on large-scale primary data gathering towards shorter-term, smaller, policy-focused studies which rely primarily on readily available secondary data. These should help in overcoming some of the defects of the past research program highlighted by these evaluations. IV. Dissemination Initiatives During FY85 the RPC undertook to promote a more effective dissemination of the findings of Bank research projects, reflecting concerns about past efforts at dissemination in the highly fragmented nature of the nonbook-length output of the research program, the lack of any systematic dissemination of research output of interest to a general audience, and weakness of the internal mechanisms for providing non-research Bank staff with discriminating access to recent research findings. To deal with these issues, the RPC established a three-tier structure of publications designed to serve a number of different audiences. Research News, a successor of the old Research News containing considerable changes in substance and presentation, will appear four times a year. It is journalistic in style and format and combines descriptions of newly approved research projects, abstracts of completed research, and highlights from selected Bank publications. It regularly updates initiatives taken by the Bank's research administration, and brings new research findings to the attention of the widest possible audience. The World Bank Research Observer is a new publication which will be issued twice a year. It seeks to help policymakers and nonspecialists concerned with the problems of developing countries keep abreast of the growing body of relevant research. Articles in the Observer will be written primarily for the generalist reader with some knowledge of economics. The World Bank Economic Review is a refereed professional economics journal of high standard aiming for worldwide readership among development professionals in government departments, private business, financial institutions, international agencies, universities and development research institutions. The Review will publish articles by Bank staff and consultants - iv - and is intended to serve as the principal professional outlet for the dissemination of the flow of Bank-sponsored research, policy analyses and other studies in economic development. V. The Research Program in Perspective Some of the results of recently completed research or the preliminary findings of work in progress are highlighted in this section. A. Current and Long-Standing Development Debates: Given the increased importance of international economic interdependence, global economic issues concerning debt, trade and aid have formed a major part of ongoing debates on development. Studies concerned with these are reviewed, followed by other areas concerning adjustment policies, education and agricultural policies. B. Generic and Behavioral Issues: An important part of the research program is devoted to the analysis of behavioral and generic issues such as living standards and income distribution, technological development, agricultural development, labor markets, urbanization, education and demography. A better understanding of these processes is essential in guiding Bank lending and the formulation of appropriate development policies in the various sectors. C. Specific Operational Issues: These include projects concerned with more narrowly focused operational needs, for instance in the evaluation and monitoring of Bank projects, such as a project evaluating the impact of farm extension and mechanization, an analysis of the effects of road conditions on the cost of using roads, and the desirability for diversification of secondary school curriculum to include prevocational subjects. REPORT ON THE WORLD BANK RESEARCH PROGRAM Table of Contents Part I I. Finance, Size and Administration of the Research Prograes...................................w....2 II. The Research Program: Objectives, Priorities and New Developments.........................................12 III. Evaluation of Completed Research Projects....................24 IV. Dissemination Initiatives.o..................................29 V. The Research Program in Perspective..........................32 Annex 1: Summaries of Evaluations of Completed Research Projects........................................43 Appendix 1. Research Priorities...................................... ...56 2. Operational Manual Statement No. 9.70 ................. .....58 3. RPC Members ................................................ *....61 4. REPAC Members ............................ . .................... .62 5. Editorial Board Members for Research Publications............. .63 6. Guidelines for Evaluation of Completed Research Projects.......66 7. Seminar Series on the "Frontiers of Economics" ................69 Part II - Narratives of Research Studies by Functional Category - Financial status of ongoing and recently completed RSB-Funded Projects INTRODUCTION Fiscal year 1985 represented a period of consolidation for the Bank's research program, during which the changes in the administration of research and the shifts in the research program in accordance with the new research priorities outlined in last year's report were implemented. The new research administration procedures introduced last year were reviewed by a committee set up by the Research Policy Council (RPC) at the end of FY85. Also, important new initiatives were undertaken by the RPC for the dissemination of research results, while the Research Projects Approval Committee (REPAC) completed its evaluation of a Large backlog of completed research projects. Finally, in the comparative studies program two new studies were fully funded and research preparation for another approved in FY85. This report describes these developments. The report has two parts. Part I provides a summary of the financial and administrative aspects of Bank research (Section I), outlines the objectives the Bank's research program seeks to serve, its current research priorities, a description of the current status of the comparative studies program which was initiated by the Research Policy Council in early 1984, as well as an overview of the new research starts approved during the year (Section II). As noted in Last year's report, the RPC was concerned about the evaluation of the output of research projects funded by the Research Support Budget (RSB). In FY85 REPAC conducted a major evaluation of the backlog of completed research projects. The results are highlighted in Section III whilst the detailed evaluation reports of the subject panels are presented in the annex to Part I. Another major concern of the RPC over the past year was the improvement of the dissemination of Bank research outputs both within and outside the Bank. This led it to approve the establishment of three new research publications to disseminate Bank research. These developments are reported in Section IV. In accordance with the Board's stated desire for this report to focus on the output and impact of the research program, Section V presents some research results of recently completed projects, as well as the preliminary findings of research work in progress in different parts of the Bank. Finally, the narratives of research projects financed from the Research Support Budget which were ongoing in FY85 are presented in Part II of the report. -2- I. Finance, Size and Administration of the Research Program Research in the World Bank is conducted mainly in ERS, OPS and EIS. In FY85, the World Bank devoted a total of $23.1 million to economic and social research, an increase in real terms of 2.6 percent over FY84. Although this increase is much smaller than that reported for the previous year (15 percent over FY83), the share of research in total Bank administrative expenses has remained constant at 3.5 percent (see Table 1). Research constitutes about one-fifth of the total analytical work undertaken in the Bank in support of its lending activities. The two other major components of the Bank's analytical work are country economic and sector work, and policy analysis. As it is often difficult to differentiate between these three forms of analytical activity, the above distinctions are mainly of budgetary use. Of this total expenditure on research, $4.8 million was funded by a central Research Support Budget (RSB). This budget, administered by VPERS, allows researchers in all parts of the Bank to compete for funds to finance consultants, research assistance, computing and travel in connection with research projects which have been centrally approved. The rest represents the cost of staff time spent by Bank researchers on both RSB-funded research projects ($8.1 million) and on studies initiated by Bank departments ($10.1 million). Taking the RSB and stafftime expenditures together, centrally approved projects account for 56 percent of total research expenditures, compared to 44 percent for departmentally-funded studies and research preparation. These proportions have remained the same as in FY84 (Table 2). Table 3 provides the breakdown of Bank research by departments, distinguishing between centrally approved projects, research preparation and departmental studies. In FY85, ERS, the main research complex, was responsible for 48.1 percent of Bank research, while OPS/EIS and the Regional Offices were responsible for 44.9 percent and 6.9 percent respectively. This reflects no significant change from FY84. Table 4 shows the distribution of resources devoted to research in FY85 by subject category rather than by organizational unit. The RSB is the main instrument for coordinating research throughout the Bank, and for influencing its direction and quality. As reported last year, the RPC has sought to make Bank research more policy-oriented, cost- effective and quicker yielding in its results. Reflecting these new directions the new research projects approved from the RSB by the Research Projects Approval Committee (REPAC) during FY85 have tended to be of smaller 1/ The Bank's research program comprises research projects which are centrally approved and funded through the Research Support Budget and other studies initiated and supported by departments through the alLocation of stafftime. It explicitly excludes research financed under loans and credits and research of a technical nature, such as that funded by Bank participation in the Consultative Group on International Agricultural Research (CCIAR). Table 1: RELATIONSHIP OF RESEARCH TO OTHER BANK ANALYTICAL WORK AND ADMINISTRATIVE BUDGET (Current US S million; percent of Bank analytical work) FY80 FY81 FY82 a/ FY83 a/ FY84 a/ FY85 a/ $ % 5 % $ % % $ % % S I Research 11.4 20.4 15.8 20.5 16.6 16.0 117.8 16.0 21.7 19.2 23.1 20.5 Economic and Sector Work 34.7 62.2 48.5 62.8 63.5 61.4 69.5 62.3 72.4 64.0 71.2 63.3 Policy Work b/ 9.7 17.4 12.9 16.7 23.4 22.6 24.2 21.7 19.1 16.9 18.2 16.2 I Total Analytical Work 55.8 100.0 77.2 100.0 103.5 100.0 111.5 100.0 113.2 100.0 112.5 100.0 Memo Item: Research as a % of Bank Administrative Expenses 3.4 3.6 3.3 3.2 3.5 3.5 Memo Item: Research Expenditure In constant 1985 dollars 17.6 19.8 19.3 19.5 22.5 23.1 Notes: Source: PBD. Details may not add due to rounding. a/ Revised. b/ includes ERS, OPS and EIS policy work only. Table 2: RESOURCES / DEVOTED TO RESEARCH BY COMPONENT, FY78-85 (percent of total research resources) Current US$ million FY7G FY79 FY80 FY81 FY82 b/ FY83 b/ FY84 b/ FY85 b/ S S S I S S S S I S S S S S S g Centrally Approved Rebearch c/ 5.7 60.6 7.3 70.9 7.8 68.4 8.7 55.1 8.5 51,2 10.3 57.9 12.2 56.2 13.0 56.3 of which -Research Support Budget (2.2) (2.9) (2.7) (2.6) (2.6) (3.3) (3.7) (4.8) -Staff CosIb (3.5) (4.4) (5.1) (6.0) (5.9) (7.0) (8.6) (8.1) Departmentally Funded Research Studies d/ (staff time costs) 3.8 40.4 3.0 29.1 3.6 31.6 7.1 44.9 8.1 48.8 7.5 42.1 9.5 43.8 10.1 43.7 i0rAL RESEARCH 9.4 100.0 10.3 100.0 11.4 100.0 15.8 100.0 16 100.0 17.8 10010 21.7 100.0 23.1 100.0 Note: Percentages do not add, due to rounding. a/ Includes all administrative CO%tb. b/ Revised. c/ Includes the lull cobtb Of all research activities which were reviewed and approved by the Research Projects Approval Committee, and the comparative studies program wnich is reviewed by the ResedrCh Policy Council. d/ Research activities conducted using departmental resources only and not subject to review and approval by the Research Projects Approval Committee. These studies were carried out by the departments listed in table 3. TABLE 3: RESOURCES DEVOTED TO RESEARCH, BY DEPARTMENT a/, FY85 (CURREN5 USS 000; STAFF YEARS) Centrally Approved Projects Research Departmental Total Research Research Support Preparation Studies Budget Stall Total Staff Staff Staff Total Research Expendilure Time b/ Costs C/ Costs Time b/ Costs c/ Time b/ Costs c/ Time b/ Costs c/ Costs d/ Operations Policy Staff Agriculture and Rural Development 392.8 1.4 297.8 690.6 2.5 541.5 2.2 483.8 6.1 1323.1 1715.9 7,4 Country Policy 1250.6 3.4 738.0 1988.6 1.7 377.2 2.0 427.5 7,1 1542.7 2793.3 12,1 Education and Training 273.9 .6 126.2 400.1 2.2 483.5 .4 83.0 3.2 692.7 966.6 4.2 Population Health and Nutrition 21.5 .2 46.4 67.9 .1 25.0 2.3 493.6 2.6 565.0 586.5 2.5 Transportation 146.0 3.1 675.4 821.4 .0 .0 4.0 863.3 7.1 1538.7 1684,7 7.3 Water Supply and UrDan Development 209.1 2.0 423.2 632.3 .6 127.2 .2 49.5 2.8 599.9 809.0 3.5 Projects Policy 72.5 .0 7.4 79.9 .0 .0 .7 157.4 .8 164.8 237.3 1.0 Economic Development Institute .0 .0 .0 .0 .0 .0 1.0 219.5 1.0 219,5 219.5 1.0 Office of the Vice Prebident - OPS 80.6 .0 5.8 86.4 .0 .0 .2 45.8 ,2 51.7 132.3 .6 Total 2447.0 10.7 2320.1 4767.1 7.2 1554.5 13.0 2823.4 30.9 6698.1 9145.1 39.6 Inergy and Industry Staff Energy .0 .0 .0 .0 .0 .0 1.6 342.8 1.6 342.8 342.8 1.5 Industry 70.7 1.3 280.2 350.9 .0 .0 2.5 526.0 3.9 806.1 876.8 3.8 Total 70.7 1.3 280.2 350.9 .0 .0 4.2 868.8 5.5 1148.9 1219.6 5.3 Economics Research Staff Development Research 1482.5 20.1 4457.9 5940.4 7.2 1606,3 6.7 1479.4 34.0 7543.6 9026.1 39.1 Economic Analysis and Projections e/ 60.3 1.1 253.9 314.2 *6 128.1 2.5 557.0 4.2 939.0 999.3 4.3 Office of the Vice President - ERS 366.3 1.7 378.9 745,2 .4 86.2 1.1 246.5 3.2 711.7 1078.0 4.7 Total 1909,1 22.9 5090.7 6999.6 8.2 1820.6 10.3 2283.0 41.4 9194.3 11103.4 48.1 Fegions 411.1 2.0 426.1 837.2 .0 4.5 3.6 760.6 5.6 1191.2 1602.3 6.9 Other f/ .0 .0 1.4 1.4 .0 .0 .0 2.1 .1 3.5 3.5 .0 Total 4837.9 37,0 8118.4 12956.3 15,4 3379 6 31.1 6737.9 83.5 18235.9 23073.8 100.0 NOTE: Details may not add due to rounding. a/ Include all administrative costs. b/ Data on staff time are taken from the Bank's time reporting system. They include regular professional, departmental consultant, and Y.P. staff years only. c/ Cost factors used are all-inclusive average unit costs by vice-presidency, d/ Includes research support budget expenditure and total staff time costs. e/ Excludes routine work on commodity analysis and projections. V1 f/ Young Professionals Program, and research done under collaborative arrangements with UN organizations, I TABLE 4: RESOURCES DEVOTES 40 RESEARCH, BY SUBJECT CATEGORY, 1985 (CURRENT US$ '000; STAFF YEARS) Centrally Approved Projects Research Preparation/ Total Research Research Support Departmental Studies Budget Staff Total Staff Staff Total Research Expenditure Time b/ Costs c/ Costs Time b/ Costs c/ Time b/ Costs c/ Costs d/ $ 1. Development Policy and Planning i.A. Income Distribution 156.7 2,4 531.1 687.8 7.3 500.1 4.6 1031.2 1187.9 5.1 I.B. Planning Growth, Ctry. Econ. Analysis 611.8 3.8 839.7 1451.5 9.5 2077.7 13.3 2917.5 3529.3 15,3 Subtotal 768.5 6.2 1370.8 2139.3 11.7 2577.9 17.9 3948.7 4717.2 20.4 II. International Trade and Finance 1449.6 8.5 1871.3 3320.9 2.5 543.3 11.0 2414.7 3864.3 16.7 III. Agriculture and Rural Development 1112.0 8.0 1751.8 2863.8 5.1 1117.1 13.1 2869.0 3981.0 17.3 iv. Inustry 191.3 3.4 729.7 921.0 1.7 359.1 5.1 1088.8 1280.1 5.5 V. Transportation, Water and Telecommunication 97.5 2.9 639.3 736.8 :4.0 861.6 6.9 1501.0 1598.5 6.9 VI. Energy 136/0 1.1 243.7 379.7 1.6 334.5 2,7 578.2 714.2 3.1 VII. Urban and Regional Development 281.1 3.2 698.4 979.5 .8 171.7 4.0 870.1 1151.2 5.0 VIII. Population and Human Resources VIII.A. Education 377,7 2.4 528.2 905.9 2.3 497.7 4.7 1025.9 1403.6 6.1 VIII.B. Labor and Employment 3.0 .1 23.9 26.9 1.9 421.8 2.0 445.7 448.7 1.9 VIII.C. Population and Health 185,4 1.0 212.2 397.6 3.1 667.5 4.1 879.7 1065.1 4.6 Subtotal 566,1 3.5 764.2 1330.3 7.3 1587.1 10.8 2351.3 2917.4 12.6 IX. Other 235.8 .2 49.2 285.0 11,7 2565,1 12.0 2614.3 2850.1 12.4 Totl 4837.9 37.0 8tt8.5 12956.4 46L5 10117,5 83.5 18236.0 23073.9 100.0 See footnotes In Table 3. -7- size than in the past. Consequently, they are typically also of shorLer duration so that for them the interval between the inception of a research idea, execution of the research project and the dissemination and application of research results will be shortened. Equally important, projects have become more focused on policy-oriented research. Most of the large research projects approved in FY85 formed part of the special program of comparative studies (described in Section II) which are approved directly by the RPC, and these accounted for 29 percent of RSB expenditures in FY85. Three important developments took place in the administration of research during FY85 concerning regional coordination of research, the evaluation of completed research projects, and in the dissemination of research results. First, to facilitate better communication and coordination between the Regional offices and the research staff responsible for the comparative studies, the Comparative Studies Coordination Committee, consisting of the six Regional Chief Economists and the Research Administrator, was established. Second, REPAC undertook to evaluate the backlog of completed research projects, with REPAC members acting as chairmen of six subject panels under which the research projects were organized. They were assisted by internal, external and OED reviewers who submitted evaluation reports on individual projects which were used by the chairmen in preparing both reports on individual projects and subject panel reports. Third, following the decision by the RPC to publish two new journals, The World Bank Economic Review and The World Bank Research Observer, and to restyle the Research News, editors and managing editors were appointed to launch these publications, along with editorial boards charged with the responsibility of selecting or commissioning articles for inclusion in the journals. The development of an infrastructure in the Research Administrator's Office to support the production of the three research publications has also progressed satisfactorily. These will be taken up in the subsequent sections in greater detail. Review of the Reorganization of Research Management Following the reorganization of research administration outlined in last year's Annual Report, the main bodies overseeing the allocation, monitoring and evaluation of funds spent from the RSB are: (i) the five-member vice-presidential Research Policy Council (RPC) which has overall responsibility for guiding and coordinating research; (ii) a Bank Research Advisory Group (BRAG) consisting of eighteen senior staff from all parts of the Bank which advises the Council on Bankwide research issues; and (iii) The Research Projects Approval Committee (REPAC) consisting of nine senior staff members, which assesses the technical quality of research proposals submitted for funding from the RSB, and evaluates completed projects. (REPAC's rules and procedures are given in Appendix 2). Supervising managers in the research producing departments are responsible for ensuring the institutional relevance of research proposals and their conformity to the research priorities set by the RPC. - 8 - A three-member committee was appointed in FY85 by the Research Policy Council to review these changes in research administration. The Committee reviewed the relevant files and documents in the Research Administrator's Office covering the period February 1984 (when REPAC was formed) to July 1985 and interviewed a large number of Bank staff covering all parts of the Bank and a wide spectrum of its hierarchy. It reported in October 1985. In the following paragraphs we first summarize its findings on the distribution of research projects, its assessment of the REPAC review process and its recommendations which were accepted by the RPC. Next we outline its recommendat:ons (and the actions taken by the RPC) on the size and functions of REPAC, on BRAG and on changing some adverse perceptions of the new system. (1) The Distribution of Research Projects Over the period under review, REPAC, as a full committee, met eleven times mostly to discuss proposals requesting more than $125,000. In addition to these meetings, according to the current rules, subcommittees of REPAC met several times for projects requesting less than $125,000. During this period, REPAC reviewed 94 projects, 11 of which were in Category A (more than $125,000), 9 in Category B ($50,000-$125,000) and 74 in Category C (less than $50,000). The average turnaround time for the review of these projects was 10 weeks for Category A; 5.6 weeks for Category B; and 2.3 weeks for Category C. As originally intended, the new rules and procedures implemented by the Research Policy Council have shifted the incentives provided to research sponsors away from submitting large research proposals towards smaller ones. Of all the projects submitted to REPAC, 79 percent were for projects of less than $50,?0, whereas the cther two categories combined accounted for 21 rArcent. - Furthermore, there appears to be a strong regional involvement in requesting research funds. Thirty-two requests were received from the regions; the distribution was as follows: four were received from East Asia; seven from South Asia; three from East and South Africa; six from West Africa; six from EMENA; and six from LAC. ES submitted 36 requests and OPS 45 during the period covered by this review. - Over this same time period, REPAC approved 68 percent of the research proposals submitted. Because some proposals are approved at Less than full funding while others are totally rejected, REPAC has approved 42 percent of the dollar amounts requested; total requests for research funds amounted to 11 Since seven of the eleven requests for more than $125,000 were submitted either for REPAC's initial February 1984 meeting or were unfinished business of the old Research Committee, the tilt towards smaller proposals under the new procedures may be even stronger than the data indicates. 21 The total number of funding requests (113) exceeds the total number actually submitted (94) because a request may be sponsored by more than one organizational unit, in which case the request is ascribed to each of the participating departments. - 9 - $9.048 million while $3.793 million were approved. Considering only research proposals actually approved by REPAC, the dollar amounts approved as a percentage of the amounts requested were: 58.4 percent for projects in Category A; 61.4 percent for projects in Category B; and 90.7 percent for projects in Category C. For all approved proposals, 62.8 percent of the dollar amounts requested were approved by REPAC. This can be interpreted to mean that, on average, a research proposal has a 68 percent chance of approval, though at Less than full funding. The approval rate by department and size category of the projects is shown in Table 5. (2) The Reviewing Process As required by current RPC rules all proposals submitted to REPAC have been refereed by at least two individuals. All proposals requesting funds over $50,000 have had internal and external referees. The Committee found the internal (Bank staff) and external referees chosen were of high quality and well matched to individual proposals. The anonymity of the referees contributed significantly to the quality of reviews. This arms- length approach to evaluation has effectively eliminated "interpersonal strategic considerations" (seen as a major problem of the old system by the OPD review committee as outlined in last year's Annual Report) and provided more honest evaluations. The Committee found a clear consensus among researchers and reviewers that this refereeing process and system of speedy decisionmaking are fair and effective and superior to the old system. The Committee, therefore, recommended and the RPC accepted that the current process of evaluation be largely maintained and the anonymity of internal and external referees be preserved. Proposals requesting funds under $50,000 which, under the existing rules, do not require referees, have increasingly been sent to internal and external referees and in the last few months this has become the norm. The Committee suggested that this practice should be formalized as the benefits to researchers of the detailed comments from referees' outweigh any costs of the associated delays in the review process. The RPC accepted its recommendations that: (i) for all projects under $50,000, at least two referees' reviews be obtained (if possible, one should be external) and a decision be made within two weeks; (ii) requests for research preparation funds should continue to be decided by the Research Administrator; for research preparation requests that exceed $30,000, he should solicit the views of at least two other REPAC members. (3) The Size, Composition And Function of REPAC REPAC currently consists of nine members: three from ERS, two from OPS, one from EIS, and three from the Regions. The frequent meetings of REPAC, the large number of proposals to be evaluated, and the importance of a fast turnaround time impose a fairly heavy work load on individual members. - 10 - Table 5 REPAC Approval Rate ERS OPS Regions Bankwide DRD EPD Total Total Category A (more than $125,000) - % proposals approved 75 0 60 67 33 57 %$ amount approved 41 0 37 60 15 38 Category B ($50,000-$125,000) % proposals approved 80 - 80 67 33 64 %$ amount approved 46 - 46 43 12 36 Category C (less than $50,000) % proposals approved 69 78 73 79 58 71 %$ amount approved 52 63 55 62 41 53 TOTAL A + B + C 2 projects approved 72 70 72 76 53 68 %$ amount approved 44 40 43 57 22 42 Note: A "-" indicates no proposals were received by REPAC in that category. A "0" indicates that none (of those received) was approved. - 11 - To ease the workload, to generate and maintain support for research in the operations complex (particularly in the regions), and to ensure stronger interaction between researchers and the regions, the Committee recommended and the RPC approved: (i) an expansion of REPAC by two members with operational experience selected from the regions; (ii) the RPC replace about 25 percent of the members of REPAC every two or three years. The Committee also noted that there was some misunderstanding of REPAC's technical functions in reviewing proposals. It suggested and the RPC accepted that: (iii) as part of its technical functions REPAC should also take account of the proposal's broad conformity with the research priorities laid down by the RPC. (4) The Bank Research Advisory Group (BRAG) During the period under review by the Committee, BRAG met only twice. The Committee found that its terms of reference are not clear to its members and as a body it lacks clear focus and direction. In many ways, the Committee believed that whatever the original motivation for instituting BRAG, continuation, in its current mode, was counterproductive. The RPC accepted the Committee's recommendations that BRAG be replaced by the Comparative Studies Coordination Committee which would be expanded and renamed the "Research Coordination Committee" (RCC); it would coordinate relationships between the regions and research producing departments on all research projects. Furthermore, the RPC accepted the Review Commitiee's recommendation that in order to obtain Bank-wide views on specific research related issues, 'ad hoc' committees will be set up, as the need arises. (5) Perceptions Finally, the Review Committee noted two areas where there was a need to redress some jaundiced perceptions of the new research procedures. The first concerned the transparency of the new system. The Committee noted that transparency was defined differently by different individuals. Even though information on the new procedures, the new research priorities and the content of the program is disseminated via Operational Manual statements, annual reports and various memoranda, there was a strong criticism by both researchers and other Bank staff that they are poorly informed about REPAC and RPC procedures. The Committee did not subscribe to the view that all individuals in the Bank must be fully informed about all aspects of research and its management. The RPC concurred. However, in an attempt to change these perceptions, but without adding to the already large flow of paper in the Bank, the RPC accepted the Committee's recommendation: - 12 - to use both the new Research News and the new Research Coordination Committee as the major instruments for dis- seminating such information. Secondly, the Committee reported that there was a lack of information and corresponding misperceptions about the procedures for the inclusion and appraisal of particular studies in the special comparative studies program. It was noted that the current procedures for the comparative studies recognize the inherent risks and the large investments required in their design; they attempt to minimize these risks by specifying the topic, requiring a pre-project proposal brief -- designed to outline the major issues/questions and their relevance to policy and the Bank -- and setting up a Review Board (made up of external and internal referees) for each study, which evaluates both the pre-project proposal brief and the final research proposal itself and subsequently monitors the progress of the study until its completion. Nevertheless, to overcome the misperceptions about these procedures, the Committee suggested and the RPC accepted that: REPAC would examine the Review Board's recommendations an subsequent comparative studies and its judgment would be submitted to the RPC, which would still take the final decision on the approval of the study. The above measures taken by the RPC should allay these perceptions about the transparency of the system. Ir. The Research Program: Objectives, Priorities and New Developments Research Objectives The Bank's research program continues to be guided by the broad objectives stated in last year's Report on the World Bank Research Program: to support all aspects of the Bank's operations; to broaden understanding of the development process; to improve the Bank's capacity to provide advice to member countries; and to assist in developing indigenous research capacity in member countries. These objectives underline the twin functions that research performs in the Bank, both supporting Bank cperations as an intermediate input - increasingly important as the role of the Bank as a policy advisor to developing countries expands - and as one of the important final outputs of the Bank, in keeping the Bank in the forefront of thinking on the economics of developing countries, and sharing research results with the development community. In translating these broad objectives into more specific research program priorities, last year's Report noted the changed perception of the development process which has led to new research directions by the RPC. This essentially reflects the evolution of knowledge about the development process from the interaction of research results and experience. Unlike the natural - 13 - sciences, there are no real scientific revolutions in economics, but as Professor Sir John Hicks has noted most revolutions in economic thought are more in the nature of a "change of attention." Economic theories underpinning beliefs about the workings of an economy, which at particular times are fairly appropriate, are subsequently rejected in the light of changing circumstances. Whereas in the natural sciences 'the facts' to be explained are in a sense immutable, in economics 'the facts' are thrown up by a constantly changing world: "a theory which illumines the right things at one time may illumine the wrong things at another. This may happen because of changes in the world (the things neglected may have gained in importance relatively to the things considered) or because of chaqes in ourselves (the things in which we are interested may have changed)." - Perceptions of development have changed in recent years, in part because the world has changed, in part because earlier research answered some important questions and led to policies that reduced the magnitude of the problems that then seemed central, and in part because of the burgeoning of empirical research which has contributed so greatly to our knowledge about the economics of developing countries. In an important sense, the change can be summed up as an increased recognition of the importance of markets and incentives - and of the limits of government intervention and central planning. But, having said this, it must be emphasized that the current reappraisal of the role that governments should play in development does not entail any commitment to laissez faire and research must be directed as much to understanding how governments act and can be effective as to understanding the functioning of markets. One of the most important functions of government is to establish and maintain the countries' 'infrastructural' and 'social overhead capital,' such as roads, communications, ports, primary education, primary health services, etc., much of which have some features of a public good. En addition and not to be underestimated are the classical governmental functions of providing the public goods of law and order and a sound money, as well as an economic environment where individual thrift, productivity and enterprise are cherished and not thwarted. The successful economies in the Third World which have recognized the importance of markets and incentives are not laissez faire economies. Their success is in large part due to the importance attached by their governments to providing these essential public goods required for development. Even though these governments have not fully succeeded in avoiding policy induced distortions in their economies, compared with the Less successful developing countries they have concentrated the state's energies and resources relatively more on doing those things which only governments can do, and less on those areas of economic life which are by and large best left to private agents. 1/ J.R. Hicks: 'The Scope and Status of Welfare Economics,' Oxford Economic Papers, Nov. 1975, p. 320. - 14 - Once it is recognized that individuals respond to incentives, and that "market failure" is the result of inappropriate incentives rather than of nonresponsiveness, development economics becomes an "applied applied field," in which the tools and insights of labor economics, agricultural economics, public finance, and so on are addressed to the special questions and policy issues that arise in the context of development. The modern view of development focuses on both resource accumulation and improving the efficiency of resource use. This latter concern concentrates on improving markets -- by institutional methods such as developing the capital market, by governmental provision of public goods such as agricultural research and extension services, and by removing government- imposed impediments to economic efficiency such as import licensing, currency overvaluation and other regulations that drive a wedge between private and economic profitability. This is not to downgrade the importance of resource accumulation. All observers recognize that countries with low per capita incomes have little physical and human capital per head, and that increasing capital is essential to growth. However, given the earlier emphasis on resource accumulation and the fact that many developing countries have dramatically increased savings rates without raising their growth rates, analysis of the efficiency issues has understandably come to the fore in recent years. Research Priorities In view of these changing perceptions of the development process, last year's Annual Report reported a new set of research priorities approved by the RPC, which are listed in Appendix 1. They imply a shift in the research program toward greater emphasis on research oriented to making policy and less efforts to understand what would happen in an optimizing society where all regulations cculd be exogenously imposed and costlessly enforced; it is away from big modeling enterprises for planning and forecasting and toward studies of how individuaLs, institutions, and governments behave in different economic environments. In summary, five broad areas have emerged as the most important ones for supporting the Bank's operations and for keeping the Bank at the forefront of the economics of developing countries. - The costs and benefits of government intervention. As knowledge has increased, a central question is what governments can achieve, and how govern- ments behave. In a sense, the effort is to understand the functioning of governments, in both a positive and normative sense, in much the same way as so much sophisticated analysis has gone into analyzing the functioning of markets. - The interplay of incentives and institutions. How do various insti- tutional arrangements affect the workings of various policy measures? How do these same measures impinge on private and public agents? - 15 - - The interaction between DCs and LDCs in the world economy. Espe- cially in light of the experience of the successful developing countries with outward-oriented strategies, improved understanding of the interactions between developed and developing countries becomes increasingly urgent. Studies in this area seek to understand the linkages between DCs and LDCs and the impact of policy measures on them. This line of research also analyzes what global trends mean for developing countries and their policy choices. - The way short-term policies affect long-term development. Focus here is on the link between policies geared at short-term macroeconomic balance and those aimed at long-term growth with emphasis on complementarities and trade- offs between short run and long run objectives. - The role of economic planning. Given that the physical planning models of the 1950s and 1960s no Longer seem the central element of policy concern, a question arises as to the appropriate role of planning for develop- ment. As already indicated, the emerging view of government gives it a strong positive role in areas of both infrastructural development and institutional improvements. The research effort generally will shift from comprehensive planning models for economies or sectors to studies of institutional planning and development, and an analysis of how effective planning of public sector investment programs, expenditures, and receipts can best be undertaken in ways conducive to development. A major question is the ways in which rules may be modified and institutions developed or changed so as to be supportive of better functioning of markets and more effective government intervention, where appropriate. In several of these areas, a major question of concern for the Bank is the effectiveness of aid in the development process. One particular focus of research cutting across all five lines of inquiry, relates to the lessons that may be learned from past foreign assistance to improve its effectiveness in the future. The Comparative Studies Program Some, though by no means all, of the priority questions are ones which, at the present time, existing theory cannot answer. Much of the needed research is inductive and positive in nature: how has trade Liberalization proceeded? What has happened when countries have attempted to control agri- cultural prices? And so on. Once policies are put in place, what pressures arise to alter them over time? And how are they actually implemented? The fact that different developing countries have addressed similar policy concerns in different ways provides a number of 'experiments' from which a great deal can be Learned. While an analytical framework is essential for addressing these ques- tions, they are at heart empirical. And, because policies are implemented over time for purposes of empirical analysis, a major problem of addressing these questions on a country-by-country basis is that focus is on evolution - 16 - over time, and analysts are often confronted with difficulty in sorting out those events which arose from the policies under analysis from those phenomena which had origins in other, simultaneous or contemporaneous, events. Moreover, the underlying questions are ones about the lessons to be learned from different policy stances, and efforts at answering them can probably best be undertaken by comparisons of alternative experiences. Since, within each country, experience is limited, a more fruitful line of research would be one in which the same basic questions were addressed, within a common framework, for a number of countries across a number of natural experiments. To this end, part of the Bank's resources for research are being devoted to a "Program of Comparative Studies." In this program, for a few key policy issues, an effort is made to develop a common analytical framework for the study of a particular policy question, and then to have researchers - usually from the individual countries - work in parallel, comparing research results within a common framework. Once these individual country studies are completed, the project organizers undertake an analysis of those systematic patterns that appear to emerge from different countries' experience. Comparative studies are by their nature large-scale, and need a high degree of coordination. The comparative advantage of the World Bank in research must lie in such studies - as a multilateral agency, its opportunity to develop comparative insights into the development process is probably unparalleled. Last year's Annual Report noted that the Research Policy Council had initiated a program of large multicountry comparative studies of important policy-related issues. There are four characteristics of the studies launched so far. First, they are empirical studies of such issues as the way changing policies affect development, and how policies change. Second, they usually cover ten or more countries. All research is constrained by budgets, so there is always a tradeoff between the number of countries studied and the depth of each study. At one extreme are cross- country statistical studies that look at almost all countries but use little information on each of them. At the other extreme are country studies that use much historical information and are comprehensive. The new comparative studies fall between the extremes, using a sample large enough to enable valid contrasts and looking at countries in enough depth to perserve the analysis and perception of case studies. Third, they have a common research plan which sets out each study's objectives and methods. An analytical framework specifies the underlying theory that guides what information will be collected and how it will be analyzed in the individual studies - thus providing guidance to teams doing the country studies and ensuring that a body of information is comparable across all countries in each study. A collection of case studies will be published to present findings of interest and value from each country. And a - 17 - summary book will draw the main lessons, identifying patterns common to all the countries, contrasting differences in approach and outcome, and thus contributing most to a better understanding of development. Fourth, the individual country studies normally involve collaboration with researchers in developing countries and thus permit fruitful interaction between these researchers and the Bank. Researchers meet periodically during the course of the research and thereby can consult with researchers with common interests. This provides a valuable experience for rcsearchers whose work is otherwise limited to a much more limited range of evidence, and simultaneously adds to the credibility of the findings and, if that credibility-increases the impact of the findings on policy formulation, this will further increase the benefits of the research. Likely to be large and expensive, the comparative studies are of a kind that could not be done at universities and related research institutes. They thus coincide with the Bank's advantage in research and will reinforce, and be reinforced by, the Bank's activities in policy dialogue with its member countries. Launched in February 1984 with the approval by the RPC of the first study on "The Timing and Sequencing of a Trade Liberalization Policy", it now includes two additional studies both approved for fall funding in the second half of FY85. One is on "Agricultural Pricing Policies" and the other is on "Poverty, Equity and Growth". Funds to prepare a full proposal for a fourth study on "Macroeconomic Adjustment and Long Run Growth" have also been approved by the RPC in FY85. Each of these studies covers about eighteen to twenty countries selected from different regions of the world (see Table 6). Since the program involves such a large number of countries, a Comparative Studies Coordination Committee, consisting of the six Chief Economists and the Research Administrator, was established at the end of FY85 to provide a formal mechanism for a) ensuring regional consultation and coordination; b) providing information on the progress of the individual comparative studies to the regions; c) facilitating the participation of the regions in the periodic conferences which will be held to monitor and review the progress of each comparative study; and d) disseminating the results of the comparative studies to the regions as they become available. Following the review of research management the functions of the Committee and its membership will be enlarged. It will become the "Research Coordination Committee" (see Section I, Review of Research Management) which will provide a channel of communication between researchers, the region and the research administration, on all research projects. While the research on the two recently approved studies on "Agricultural Pricing" and "Poverty, Equity and Growth" has only just begun, the study on "Trade Liberalization" is now at a relatively advanced stage and appears thus far to have made progress according to schedule. The following sections summarize the current status of this project and some of its preliminary results, and present the outlines the other three studies currently included in the comparative studies program. - 18 - Table 6 Country Coverage of the Comparative Studies Approved by the RC The Timing and Sequencing of Trade Agricultural Poverty. Equity Regions Liberalization Pricing and Growth Latin America and Caribbean Argentina Argentina Brazil Brazil Brazil Colombia Chile Chile Costa Rica Colombia Colombia Haiti (tentative) Peru Dominican Jamaica Uruguay Republic Mexico Peru Uruguay East and South Asia Indonesia Korea (territory of Hong Kong) Korea Malaysia Indonesia (tentative) Pakistan Pakistan Malaysia (tentative) Philippines Philippines Singapore Singapore Sri Lanka Sri Lanka Sri Lanka Thailand Thailand Europe, Middle East and North Africa Greece Egypt Egypt Israel Morocco Malta (tentative) Portugal Turkey Turkey (tentative) Spain Portugal Turkey Yugoslavia Sub-Saharan Africa Ghana Ghana Ivory Coast Madagascar (tentative) Madagascar Malawi Sudan Mauritius Zambia Nigeria - 19 - (i) The Timing and Sequencing of a Trade Liberalization Policy This project addresses various issues of transition associated with trade liberalization such as the appropriate circumstaces for the introduction of a trade liberalization policy; the merits of a one-stage versus a gradual, multistage liberalization; the length of the Liberalization process and the appropriate speed of implementation; the role of tariffs and export promotion in this process; the relationship of trade policy and other measures; the costs of adjustments; and the specific policy package to ensure the sustainability of the trade liberalization policy. The objective is to draw lessons from the experiences of countries that have attempted to undertake a liberalization of their trade regime so as to understand the problems of adjustament and transition following a move from a tightly restricted towards a more open trade regime. The study covers trade liberalizat..on episodes in eighteen countries and consists of four phases. The first three phases are now completed. They provide the background material from which complete country manuscripts will be prepared. Phase IV will synthesize the eighteen country studies and will be completed in late 1987. The preliminary results for the study suggest some common attributes of most successful, significant trade liberalization attempts - that is, trade liberalization policies that have been sustained for a considerable length of time. On a priori grounds, three factors could be expected to lead to a partial or complete reversal of trade liberalization: a balance-of- payments crisis; a worsening employment situation; and inimical effects on income distribution. A balance-of-payments crisis could lead to the restriction of imports to conserve foreign exchange. Unemployment, particularly in the sectors from which protection is removed, could lead to resistance in removing protection from other import-competing activities. Large changes in income distribution, resulting from the decline of profits and other specific factor rewards in the liberalized sectors, could create resentment and reinforce objections to liberalization. Of these three potential factors hindering a sustained liberalization, the analysis of concrete liberalization episodes in the country studies suggests that the reversals of liberalization attempts have most often coincided with balance- of-payments crises. Unemployment has only been an obstacle to liberalization in a small number of cases -- primarily in Mediterranean countries. Income distribution considerations, in general, and the decline of factor rewards in the liberalized sectors in particular, have not hindered trade liberaLization. However, balance of payments difficulties foLlowing trade liberalization attempts may be the final outcome of other policies - such as fiscal policies, expansive monetary policy, running down of foreign exchange reserves, and inflexible foreign exchange regimes - which may have been used to mitigate the adverse effects, perceived or real, of trade liberalization on factor rewards. Hence, the links between trade liberalization policies and macroeconomic management will be a primary focus of the next phase of the study. - 20 - (ii) Agricultural Pricing Policy The second study on the "Agricultural Pricing Policy" was approved by the RPC in March 1985. It seeks to answer a number of questions relating to agricultural pricing policies within a common framework for some twenty countries from all World Bank regions. It is expected to be completed by June 1988. The questions to be examined are: (1) What has been the impact of government price interventions on agriculture's relative prices? (2) What has been their effect on output, consumption, trade, the budget, resource transfers, and on income distribution? (3) Are there some internal dynamic forces that lead to some predictable rules about the evolution of policy interventions? More specifically, how do the effects of the policies relate to the stated objectives of the interventions? And what explains the difference, if any, between them? This study will focus both on the short-term and on the long-term impact of these interventions. This will be done by: (a) examining the impact on relative prices within agriculture as well as between agriculture and the rest of the economy over time; (b) examining the effect of macroeconomic and non-agricultural trade policies. In particular, the impact of exchange rare policies and Dutch disease type phenomena (food aid, foreign aid, workers remittances, etc.) will be examined; and (c) by making use in each country study of existing data, studies, models and parameter estimations both from World Bank and other sources. Answers to those questions should be of interest to policymakers and helpful to the Bank regions in their advisory role. The comparative analysis to be done at a later stage should allow policymakers and advisors to assess policy options in a comparative perspective and base their decisions on evidence about the success or failure of these policies in a number of countries. (iii) Poverty, Equity and Growth The third comparative study on "Poverty, Equity and Growth", approved in May 1985 and to be completed by December 1988, is concerned with the following policy-related questions: What is the role of initial conditions (physical and human resource endowments, trade orientation, agricultural systems and socioeconomic institutions) in explaining the divergent poverty, equity and growth outcomes in the countries to be studied? Can these outcomes be related to particular policies, for instance, trade and industrial policies, fiscal and monetary policies, labor market interventions, pricing policies, social policies (such as education), direct redistribution policies such as land reform? If so how? If not why not? Were the 'failures' of policy due to bad design, to mutually contradictory policies or to a failure to deal with the countervailing actions of powerful pressure groups? Will policies which reduce poverty also improve equity, or is there a tradeoff? What are the circumstances in which particular policy packages (including reforms of current policies) are likely to lead to better poverty alleviation and growth outcomes? - 21 - The comparative framework is useful in answering these questions as it allows an assessment of the relative importance and interactions of the three basic underlying factors which can be expected to explain the observed outcomes: (a) initial conditions (economic structure and resource base); (b) institutions (forms of economic organizations); and (c) public policy interventions (including those which were or could have beer undertaken). In answering these questions the preliminary results from the other comparative studies which are phased to start before this one, on trade liberalization and agricultural pricing, will be extremely valuable. The outputs will consist of individual country monographs and a synthesis volume which will provide the comparative analysis. (iv) Macroeconomic Adjustment and Long Run Growth The fourth comparative study on "Macroeconomic Adjustment and Long Run Growth", for which research preparation was approved this year by the RPC, deals with the central issue of macroeconomic management during periods of crises. It is concerned with three main questions: 1) why some countries have succumbed to crisis and others not; 2) how best to get out of a crisis, and return to a viable growth path; and 3) what are the relationships between short and medium-term macroeconomic management in general, and long run development. To enhance its policy relevance, the study will place emphasis on the economics of government decisionmaking. Based on a comparative approach, and embracing a large number of countries in all continents, the study will attempt to throw light on the problems that governments face in devising policies that are most conducive to long run growth in an often rapidly changing economic environment. Other New Research Projects The new research projects approved this year by the Research Projects Approval Committee cover a wide range of topics which generally conform to the priority guidelines established last year by the Research Policy Council and summarized in last year's Annual Report. These are reproduced in Appendix 1. A number of these new research starts are concerned with the costs and benefits of government interventions: for instance, a study will examine the effectiveness of state intervention in the promotion of the traded goods sector in Japan in order to derive the policy implications for developing countries (Ref. No. 673-66); another will study the effects of government regulation of product quality in international and domestic trade as applied in a number of developing countries (Ref. No. 673-59); the issues of subsidy and cost recovery in the context of support programs for agriculture are the focus of another project with a case study of rubber replanting programs in Thailand (Ref. No. 673-44); at a more macro Level a study will explore the effects of fiscal deficits in developing countries as compared to those in industrialized countries (Ref. No. 672-62), while another will attempt to analyze the distributional effects of government policies in Egypt (Ref. No. 673-55). - 22 - A second group of new projects, more sector-specific, are concerned with behavioral and institutional issues: in the study of the role of risk in Sahelian agriculture for instance, farmer technology and farmers' production behavior will be investigated to help improve the knowledge of the factors influencing farmers' decisions, knowledge that is crucial in the design of farm and food policies (Ref. No. 673-67); the relative costs of various types of secondary education in Shanghai will be the subject of a collaborative research project between the Bank and Fudan University as part of a larger effort to address questions that are important for policies towards technical and vocational education in China (Ref. No. 673-69); a third study will develop a methodology for evaluating the demographic and health impacts of urban upgrading projects in Low-income neighborhoods (Ref. No. 673-45). Third, among the projects concerned with the international economic environment, one will examine the role of foreign aid and other capital flows on investment and growth (Ref. No. 673-49); another the relationships between performance indicators and monitorable policy instruments to help in the design of medium-term action programs in the context of debt rescheduling (Ref. No. 673-70). In addition to the projects funded centrally from the Research Support Budget there is a body of new research studies financed by departmental resources. Taking both together there has been a marked increase in new research activities dealing with the global issues of trade, debt, development assistance and macroeconomic adjustment. Sector-specific research is also geared more directly towards the issues faced by the Bank in its operational and policy advisory work. Evidence from all the new starts in the research program, including the comparative studies, suggests that the process of reorientation in line with the priorities established last year by the Research Policy Council and approved by the Board is well underway. An Agenda of Research Priorities for Sub-Saharan Africa REPAC took an important initiative last year to develop an agenda of research priorities for sub-Saharan Africa, as part of the World Bank's effort to promote a better understanding of the process of economic development in that region of the world and the factors underlying its present deteriorating economic situation. The agenda seeks to identify some research questions which merit the development of high quality proposals by the world-wide research community. These research priorities were developed during two meetings: The first, in Easton, Maryland, sought to elicit the views of Bank researchers and regional staff about the main research priorities. The second meeting held at the beginning of this year in Bellagio, Italy, brought together African policymakers, academics and World Bank staff. The Report - covers four main areas of inquiry. The first two--trade policy and macroeconomic adjustment, and public economics and resource mobilization--are 1/ A copy of the report is available on request from the Research Administrator's Office, Economics and Research. - 23 - concerned directly with the major determinants of the economic environment which govern economic performance. The two others address longer-term development issues concerning agricultural development and population and human resources. We highlight some of these issues in the following paragraphs. A large body of research, both theoretical and applied, is already available on the appropriate economic environment for promoting economic development. Much of this is of direct relevance for policy formulation and implementation in Africa. Furthermore, The Bank's comparative studies program will provide a vehicle for synthesizing and disseminating this stock of knowledge on important policy-related issues. In addition, however, there are areas where applied research specific to Africa to corroborate the findings from other regions in the developing world may be useful. Examples of these cited in the Agenda are: the effects of non-tariff barriers on African exports; and an ex post evaluation of infant industry protection in some sub- Saharan African economies. Much of the traditional economics of policymaking is based on some implicit institutional premises, namely that governments' have the knowledge, foresight and administrative capacity to undertake various complex interventions in the economy. It is also assumed that the intended effects of these interventions can be achieved, as the private agents whose behavior governments seek to alter can be expected to react passively -- without undertaking any countervailing actions to undermine the intent of public policies. The experience of the last three decades has shown that these assumptions may be invalid. Particularly in sub-Saharan Africa where institutions and administrative structures are weak, it will be important to assess the feasibility of particular government interventions and the likely divergence of their actual from intended outcomes when strategic interactions between public and private agents are of importance. Various issues of macroeconomic adjustment in sub-Saharan Africa could be fruitfully studied within this perspective. For example, defining macroeconomic crises as an excess of aggregate domestic expenditure above present and expected future levels of output, how do these crises typically arise? And how are they dealt with? What are their effects on growth? A related area concerns the removal of various policy induced distortions in many sub-Saharan (and other) economies. An investigation of the dynamic sequence and interactions of different, often uncoordinated and some times unintended policy interventions in the past, which have resulted in the existing distorted system of incentives, may be required to understand the reverse process of liberalizing such undesirably repressed economies. Possible research topics are: studies of agricultural pricing policies, and the winners and losers of policy change; the fiscal effects of trade reform; the political economy of government expenditure policy and the observed tendency towards structural fiscal deficits; the reform (including privatization) of public enterprises. - 24 - Whilst the above provides some areas for research which are relevant for policy reforms to improve the existing economic environment, there are a number of longer term issues concerned with the relative supplies of productive resources - including human skills - and the appropriate institutional and legal framework required for their efficient utilization. Past research on Africa (some under World Bank aegis) has shown that compared with other developing regions, factor markets (for land, labor and capital) in sub-Saharan Africa are attenuated, leading to inefficient factor use. The largely institutional causes of these inefficiences and appropriate remedies (some of which may emerge spontaneously with the increasing pressure of population on land) could be usefully studied. Furthermore, given the dramatic increase in the rate of growth of population in Africa, there are a number of fertility and health-related issues which could be usefully researched. These include studies of the demand for fertility controL which could be useful in designing appropriate family planning programs and studies of the financing of health care. Finally, given the enormo- need to upgrade the growing stock of human resources in Africa, various studies analysing the outcomes of past educational policies on appropriate human resource development and their reform could also be usefully undertaken. Developing Indigenous Research Capacity One of the important features of the comparative studies program is that it involves the collaboration of a great number of researchers and in-itutions from Part II countries. Each study under the program covers some eighteen to twenty developing countries from all regions of the world. For each country to be analyzed, efforts are made to associate local researchers and institutions in the conduct of the research, and regional conferences are organized periodically to bring them together to share their views and findings and to interact with each other. In the two studies currently underway on "The Timing and Sequencing of a Trade Liberalization Policy" and on "Agricultural Pricing Policy", t"e total numbers of local researchers and institutions involved are respectively forty-four and forty-two. Further collaborative arrangements are being made in the context of the third study on "Poverty, Equity and Crowth". Besides the comparative studies program other research projects have also used a large proportion of consultants from Part II countries. Data available for FY83 showed that the percentage of consultant days from Part II countries used on RSB funded projects was 50 percent, which can be compared with a figure of 28 percent for the percentage of Part II consultant days in the total consultant days used by the Bank. III. EvaLuacion of Completed Research Projects One of the major concerns of the RPC after it was set up in 1983 was the large backlog of completed projects resulting from the past research program which had not yet been evaluated. Under its direction, a major exercise was carried out in FY85 by REPAC to clear this backlog. As of July - 25 - 31, 1984 the number of such projects had risen to 93, representing both the backlog from previous years and the 'problem projects' that were closed by REPAC in FY84. The latter consisted of projects which had extended well beyond their authorized duration, some having been ongoing for over ten years or had overspent their budget. Because of the large number of projects requiring evaluation, the Research Policy Council decided that of this backlog only those projects utilizing more than $100,000 each from the Research Support Budget would be subject to evaluation. This reduced the number of research projects to be evaluated by REPAC to 38. The combined total authori- zations from the RSB for these 38 projects were $7.4 million, compared to $10.2 million for the whole backlog. Thus the completed evaluations cover over 70 percent of the funds spent from th. RSB. Projects to be evaluated were classified under six sectoral panels, each under the chairmanship of one or two REPAC members. An independent evaluation was made of each project &y an internal and an external reviewer. The internal reviewers were specifically asked to focus on the usefulness and relevance of the research projects to Bank policies and operations, whereas the external reviewers would focus on their technical quality. The issue of regional support to, and participation in, the projects would also be examined. A set of guidelines for the evaluation of completed research projects was provided to the reviewers (see Appendix 6). OED was also asked to participate in the evaluation by appointing a representative to each panel. However, because of the large number and diversity of projects, it decided to participate on a selective basis, particularly where its experience in operational evaluation would be most relevant. In the event, because of staff shortages, OED's participation was limited to a review of some of the projects under the agriculture and education/population/health panels. The project sponsors were asked to provide written comments on the evaluation reports of the individual reviewers. Based on the reviewers' reports, and the researcher's reactions to them, the panel chairmen put together evaluation reports for individual research projects, as well as overview reports summarizing the main findings and conclusions at the sectoral level, with a view of conveying some idea of the extent to which the research program in the Bank over the past 5-6 years has been effective. These sectoral reports are given in the Annex to this Part. In reviewing these evaluations, it should be remembered that all the projects evaluated formed part of an older research program. To the extent the new research directions enunciated by the RPC Last year reflected the need to restructure the research program towards more policy-oriented and operational research, criticisms of those older research projects on those grounds have already been taken into account in determining the current and future directions of Bank research. Moreover, four other points need to be borne in mind. First, research by its very nature is risky. What may appear ex ante to be a highly promising line of research may ex post turn out to be a blind alley. In such cases it is best to cut one's losses. Second, in some cases the stated - 26 - objectives of a research project at its inception may not appear to be as important as new ones which emerge in the course of conducting the research. In such cases it is important to change the focus of the research which should not then be judged in terms of its original objectives. Third, the research conducted may be technically sound but the questions it addresses may no longer be of much policy interest; this would be a failure of setting the right questions for research and not in its execution. Finally, as many of the research projects in the past were of long duration - both planned and unplanned - (see Table 7) the policy relevance of their results could be expected to be attenuated by time. Examples of all four cases can be found in the evaluations of individual projects. However, the new policy of allowing a maximum of 3 years for the duration of a research project, and its close monitoring during it- life time, the explicit shift in incentives to smaller and less data intensive projects, and the attempt to promote research of policy relevance should hopefully reduce these problems in the current research program. By contrast, the fully successful research project in applied social science would be one which tested and changed beliefs and actions (behavior) - both public and private - based on premises about how the world could, should or does work. An example of this is the work on the functioning of labor markets in developing countries which has shown that labor markets generally function well, and that the pessimistic view based on a rigid institutional view of labor markets and the development process that the benefits of growth would not be shared by the poor is not supported by the empirical evidence. Another project -- the City Study -- shows that cities whether in the developed or the developing world exhibit strong regularities in their pattern of development; supports the hypothesis that conclusions and policies based on fundamental behavioral findings are largely transferable; and, finally, upholds the significant operational conclusion regarding the important role of markets in the allocation of resources in urban areas. By implication the City Study suggests that urban operational strategies need not treat each city as a special case; further, that efficient city management will require appropriate economic policies and not physical pLanning. Other projects judged to be successful mostly used state-of-the-art methodologies, applying them competently to development issues which previously had not been researched to the same extent or with the same rigor. Examples of such projects include the analysis of export incentives (especially as regards the importance of access to tax-free inputs and credits) and the assessment of the role of small-scale enterprises in industrial development and employment generation. The latter found that: First, overall incentives play a central role in ensuring efficient (and appropriately labor-intensive) industrialization. Second, special interventions in favor of small-scale enterprises need to be treated with considerable caution, and cannot be justified on the basis of higher labor intensity or efficiency of small-scale enterprises because they are neither more Labor intensive or more efficient than larger enterprises. Third, especially designed interventions in support of small-scale enterprises (or of traditional types of manufacturing techniques) do lead to resource misallocation without offsetting distributional benefitp. Since interventions Table 7: Average Duration 1 of Completed Research Projects Evaluated by REPAC Number Duration Subject Category of Projects Maximum Minimum Average A. Agriculture 8 8 yrs. 6 mos. 2 yrs. 4 mos. 5 yrs. 8. Planning/Growth/Country Economic Analysis 4 8 yrs. 2 mos. 2 yrs. 2 mos. 4 yrs, 5 mos. C. Income Distribution/Labor/Employment 6 II yrs. 2 mos. 3 yrs. 1 mo. 8 yrs. D. International Trade and Finance/Industry/Energy it 9 yrs. 3 yrs, 6 yrs. I mo. E. Urbanization and Regional Development 3 8 yrs. 6 mos, 4 yrs. 5 mos. 6 yrs. 9 mos. F. Education/Population/Health 6 6 yrs, 7 mos, 4 yrs. 4 mos. 5 yrs. 10 mos. All Projects 38 11 yrs. 2 mos. 2 yrs, 2 mo. 6 yrs. 1/ Duration is defined as the period between the date of approval of the research project and the date of filing of the mandatory completion report on that project. - 28 - in support of small-scale and medium-scale enterprise development are still important in many developing countries, the project's findings are relevant to the Bank's policy dialogue in these countries. There are numerous instances in which the project results have been incorporated in the Bank's operational work. Even some projects which were thought to have shortcomings in tneir research design, have been helpful to Bank staff in providing information on,and some implications of, a specific phenomenon. An example of this is the project on Labor Migration and Manpower in the Middle East and North Africa where the data collected helped EMENA staff appreciate the implications of massive migration even though the country model that was developed--with its neglect of wages and prices--was flawed. Others, such as that on the evaluation of data on income distribution, failed to meet their initial, ambitious objectives but have nevertheless been important for the Bank's learning process and have led to a better statistical understanding of the problem. Bank research has made many important contributions to Bank operations and a better understanding of development problems and policies. There are, however, a number of lessons to be drawn from this major evaluation which should improve future research projects. The most serious problem which has been identified in the evaluation and which requires urgent attention concerns the dissemination of research results. Time and again the reviewers pointed to interesting and potentially useful research findings which have remained in unfinished form as working or discussion papers and have consequently been of limited use to the rest of the Bank, policymakers and the academic community. This is in part due to insufficient incentives for Bank staff to convert research outputs into published products for wider dissemination. Related to this is the reviewers' recommendation that for large studies, involving research results for a number of country studies contained in separate papers, a synthesis paper or published summary should be produced to assure tangible and readily accessible outputs of the research program. A contributing factor is that a number of the large and long duration studies ran into problems of staff turnover during the lifetime of the project. This led to delays in the completion of projects and difficulties in the appropriate dissemination of research findings. Furthermore, whilst some projects successfully disseminated their findings to the academic community through the publications of books and articles in professional journals, they were not effectively disseminated within the Bank. The results from other projects, on the other hand, were incorporated into the Bank's operational work without being disseminated to a wider audience. All in all, the reviewers found that there has been a serious underinvestment in the dissemination of research results. Secondly, the evaluation panels recommend a more forceful effort in the management of research. The importance of the timeliness of producing research results requires greater emphasis. Many of the projects evaluated - 29 - took much longer than originally anticipated which reduced the usefulness of their findings when they became available. Problems of turnover of staff are more likely to occur when projects suffer time overruns. Following the recent reorganization of research administration procedures, many of these defects of research management should be overcome. Other recommendations for increasing the effectiveness of the research program concern the design of research projects. It would be desirable to ensure that policy-related research projects are designed with policy-relevant questions in mind at the proposal stage so that the projects do not end up without any policy-relevant conclusions. Finally, in some projects the researchers had underestimated the difficulties of collecting primary data so that they could put in little time and effort in their analysis. In general, data collection can be a very costly exercise, even for secondary data. However, it may also be the only way to explore certain issues. Nevertheless, the cost-effectiveness of research based on Large primary data gathering exercises needs to be constantly kept in mind. Imaginative use of existing data bases is likely to yield higher and quicker returns in many areas of policy-relevant research. In the new directions for research provided by the RPC and being implemented by the REPAC in approving research projects, emphasis is shifting from long- duration research projects based on large-scale primary data gathering towards shorter term, smaller, policy-focused studies which rely primarily on readily available secondary data. These should help in overcoming some of the defects of the past research program highlighted by these evaluations. IV. Dissemination Initiatives The problem of dissemination of Bank research highlighted by the evaluation of completed research projects in the last section, has also been a major concern of the RPC. During FY85, it undertook a number of initiatives to promote a more effective dissemination of the findings of Bank research projects following a review by BRAG and discussions by REPAC. Bank research serves a varied audience. The resulting output should be of use not only to an academic audience but also to Bank staff who may no longer be researchers, to policymakers in developing countries as well as to a larger lay public which is concerned and interested in ongoing debates on development. Accordingly the dissemination of Bank research needs to be tailored to these different audiences. Three concerns were expressed regarding past efforts at dissemination. The first was the highly fragmented nature of the nonbook- Length output of the research program, which reduces its visibility to important constituencies such as the Board, and top Bank management. The second concerns the Lack of any systematic dissemination of research output relevant to answering the broad questions about the development process and development policy that are of interest to a much more general audience than - 30 - just Bank or outside professionals, at whom much of the existing dissemination efforts seem to be aimed. Finally, the internal mechanisms for providing non- research Bank staff with discriminating access to recent research findings relating to their work seem to be weak. Indeed it was felt that probably the biggest lacuna in current dissemination was in serving the internal consumers of Bank research. A new policy-related in-house journal was proposed to provide coherence and visibility to the Bank's nonbook-length professional research output and to disseminate it outside the Bank. The existing forms of publication of this research output in the form of Staff Working Papers (SWP) and Reprints were considered inadequate for a number of reasons. The SWP's are meant to represent intermediate and unpolished outputs of research projects. They are unrefereed and of variable quality, and yet, they are increasingly being looked upon as the final output of Bank research. The Reprint series issues the research output published in outside refereed journals. But given the publication lag in most journals the results of Bank research take a long time to be disseminated. Also these publication delays are a discentive to researchers in polishing their intermediate outputs, which they prefer to leave as SWPs. To deal with the resulting fragmentation, lack of quality control and absence of a discriminating guide to readers of a large and varied research output, the Research Policy Countil has approved the establishment of a three- tier structure of publications designed to serve a number of different audiences. Research News, a newsletter, is to appear four times a year. Strictly speaking it will not be a new publication, but rather a successor of the old Research News containing considerable changes in substance and presentation. With a circulation of 17,000, it will be journalistic in style and format. In keeping with its origins, Research News combines descriptions of newLy approved research projects, summary abstracts of completed research, and highlights from recent selected Bank publications. In addition it now provides two new services: first, to foster better communications with producers of research, it regularly uipdates initiatives taken by the Bank's research administration; second, in order to bring new research findings to the attention of the widest possible audience, each issue contains four to five "Research Briefs," short, nontechnical reports highlighting the policy and program implications of recent Bank sponsored research. The first issue of the new Research News appeared in the summer of 1985. The World Bank Research Observer is a new publication of the World Bank. To be issued twice a year, it aims to help policymakers and nonspecialista concerned with the problems of developing countries keep abreast of the growing body of relevant research. Articles in the Observer will be written primarily for the generalist reader with some knowledge of economics. But it is also hoped that they will be a useful source of information for specialists about research in fields other than their own and provide an introduction to topics at the forefront of today's development debates to students of economics. - 31 - The first article in each issue of the Observer will provide a summary of the results of a recently completed project--or series of related projects--sponsored under the World Bank research program. There will be three or four other articles reviewing a particular policy-relevant area of research. These reviews will carry extensive bibliographies to allow the interested reader to pursue the subject further. The World Bank Economic Review is a refereed professional economics journal of high standard aiming for worldwide readership among development professionals in government departments, private business, financial institutions, international agencies, universities and development research institutions. The Review will publish articles by Bank staff and consultants and is intended to serve as the principal professional outlet for the dissemination of the flow of Bank-sponsored research, policy analyses and other studies in economic development. Articles published in the Review will emphasize policy relevance, both implications and applications, as distinct from issues of primarily theoretical and methodological interest. They are expected to be written so as to be clearly understandable to readers with a knowledge of fundamental principles of economic theory and modern economic analysis but who may not be familiar with advanced mathematical or econometric techniques and who may not have ready access to a wide selection of current periodical Literature. Before an article is accepted for publication it will be reviewed by at least one internal and two external reviewers. Special issues of the Review may be put together from symposia on specific topics. Authors will be individually responsible for views expressed in contributed articles which are not to be taken as statements of Bank policy. The Review is still in the preparatory stages. A call for submission of articles for the first issues has been circulated and a panel of external reviewers has been put together. The Review will be published four times a year, with the first issue expected some time in 1986. Public announcement of the journal will be made when the first issue is ready for the press and articles to be included in the next several issues have been selected. Subscription rates for both the Review and the Observer will be kept at a level that will not be completely out of reach of readers in developing countries. The Publications Department will assume responsibility for the production, promotion and distribution of these journals. All three publications are managed by the Research Administrator's Office, Economics and Research. The Publications Department being responsible for their production and distribution. $140,000 from the RSB have been allocated to this dissemination effort. The editorial board members for these publications are drawn from all parts of the Bank and are Listed in Appendix 5. Whilst these initiatives provide new mechanisms for disseminating the results of World Bank research, their ultimate success will depend upon the quality and policy relevance of the research output produced by the research program. The Bank's wide-ranging research portfolio will continue to be updated in the Abstracts of Current Studies which is published annually. - 32 - In addition to the above publications, research funds have also been used to sponsor a variety of conferences and seminars, as well as a monthly seminar series on the Frontiers of Economics which is designed to keep Bank staff abreast of the latest developments and directions in economic research. Each month a distinguished economist is invited to discuss his current research, his views of the unresolved issues and their significance, and, as appropriate, applications to the Bank's operations. The series has brought distinguished economists to the Bank who do not normally address Bank audiences. The presentations are nontechnical and facilitate understanding and appreciation of the literature and controversies in all fields of economics. Seven seminars have already been held and judging from the attendance the series appears to have been very successful. A list of the seminars is appended in Appendix 7. V. The Research Program in Perspective Last year's Annual Report described the Bank research program in terms of three major themes or set of questions it seeks to address. These are all relevant for policy formulation as well as for understanding the development process: (a) current and long-standing debates on development; (b) generic and behavioral issues concerning the behavior of both individuals and governments; and (c) more narrowly focused operational issues like those concerning the evaluation or monitoring of Bank projects. This section highlights some of the results of reientLy completed research orl he preliminary findings of work in progress wi;hin this framework. - A. Current and Long-Standing Development Debates Given the increased importance of international economic interdependence, global economic issues concerning debt, trade and aid have formed a major part of ongoing debates on development. Studies concerned with these are first reviewed in this section, followed by other areas concerning adjustment policies, education and agricultural policies. 1/ The convenient categorization of individual research projects into these different themes is onLy illustrative as many projects straddle several themes. Research projects which are centrally funded are identified by a reference number. The others are departmental studies. - 33 - Debt One of the most important current debates concerns the debt crisis. A symposium on "International Debt and the Developing Countries" financed by REPAC identified the misjudgments on the part of both borrowers and lenders which Led to the debt problem and recommended cooperative solutions for its resolution, as these entailed lower costs and larger benefits for both borrowers and Lenders than any of the confrontational or unilateral solutions sometimes proposed. To help countries avoid future crises, another project on "The Assessment of Country Foreign Borrowing Strategies" (Ref. No. 673-01) has developed an analytical framework to identify a suitable trend rate of foreign borrowing given expectations of the domestic and external economic environment and to show the appropriate modifications to smooth the intertemporal path of consumption in the event of an external shock. Other debt-related issues have also been analyzed in a number of smaller studies. One examines the trends in reserve accumulation by selected debtor countries over the period 1973-84. It concludes that the quality of economic management has been more important than the level of a country's reserves in influencing perceptions of creditworthiness. Also a major study of the external debt position of sub-Saharan African countries is exploring possible options for reconciling future debt servicing with improved growth prospects. Trade The recent spread of trade restrictions affecting the export prospects of developing countries is documented in a project on "Non-Tariff Barriers" (NTBs) (Ref. No. 673-40). Based on UNCTAD data it found that in 1981, using a wide definition of NTBs, more than one-fourth of the we: :handise imports of industrial countries faced such trade barriers. Since 1981 an additional $13 billion of industrial country imports have come under NTBs -- an additional 1.5 percent of their merchandise imports. Taking the industriel counties as a group, one-half of their textile imports, one-third of cheir imports of agricultural products, iron and steel, and vehicles were s_rject to government regulation by non-tariff measures. Nearly half the non-tariff barriers took the form of quantitative restrictions, either unilateratL7 imposed or negotiated as "voluntary restraints." The other half consisted of various forms of monitoring -- such as governmental screening of import volumes and prices which signal an implicit threat to exporters that, if volumes are exceeded or the import pricer fall below an established domestic price, more direct action would be taken. These industrial country NTBs covered a larger share of their imports from developing countries than of their imports from each other and were concentrated on product categories with a large weight in developing country exports -- textiles, agricultural products, fuels. With this spread of NTBs, developing countries need to consider the best way of allocating their export quotas, so that these are met at minimum - 34 - comestic resource cost. According to the results of a study analyzing several non-price mechanisms used to allocate export quotas in Sri Lanka, Hong Kong and Korea, if production for exporta by individual firms were to fulfill the miaimum cost condition and public policy for the allocation and use of export quotas were consistent with the achievement of that purpose, then quotas assigned to different firms will differ according to the firms' production costs (i.e. the higher marginal cost of production, the lower the quotas]. A well-organized secondary market for export quotas, absence of rigid physical allocation, and, the public auction of quotas to raise revenue and minimize rent-seeking activities are the desirable policies to be adopted. Aid Of the ongoing research projects concerned witi. aid effectiveness, the project on "Managing Agricultural Development in Africa" or "MADIA" (Ref. No. 673-04) involves a study of the major donors' aid to African agriculture over the 1970-84 period. Preliminary results of the study of World Bank agricultural programs in six African countries, found a number of discre- pancies between the Bank's sectoral analysis and the content of its subsequent lending program, as for instance in Malawi where despite their identification in sector work, inadequate attention was devoted to incentives to smallholder agriculture in Bank projects. This has jeopardized their success. Similarly the high concentration on industrial investments by the Bank in Tanzania and the neglect of resource allocational issues at the macroeconomic level has had harmful effects on agriculture. Preliminary results from another project recently funded by REPAC, "Multicountry Analysis of Development and Aid" (Ref. No. 673-49), indicates that the marginal propensity of recipient countries to invest nonrelief aid flows is significantly greater than that of domestic income and hence past fears of an adverse relationship between foreign aid inflows and domestic investment and growth in host countries may be unfounded. Adjustment Policies An important area of current concern in designing conditionality for policy-based lending, is the identification of good performance indicators. A study on "Adjustment Policies in Developing Countries 1979-83" seeking to derive such indicators from an analysis of the policy response of a group of thirty developing countries to the external shocks of the 1979-82 period, found much of the intercountry differences in domestic adjustment tc external shocks was explained by exchange rates and energy price policy and to a lesser extent by monetary and interest rate policy. Another study surveyed policy issues arising in averall economic liberalization attempts and showed that the major determinants of success are realistic fiscal and exchange rate policies and careful sequencing of financial and trade reform measures. The analytical work strongLy indicates that a financial sector liberalization preceding trade reform will lead to serious misallocation of resources, potential balance-of-payments problems, and real exchange rate effects that will hamper any subsequent attempt to - 35 - liberalize commodity trade. Empirical evidence based on the Chilean expe- rience strongly supported those theoretical results. Related to this, a major empirical project on "Liberalization and Stabilization in the Southern Cone" (Ref. No. 672-85) studied the liberaliza- tion cum stabilization packages introduced by Chile, Uruguay, and Argentina in the mid-1970s. It found that the first phase of reforms consisting of anti- inflationary policies based on "orthodox" stabilization policies was successful, especially in Uruguay and Chile--with both exports and productivity growing. But in the second phase when the exchange rate was used as an anti-inflationary tool and foreign capital flows accelerated with the opening up of the capital account of the balance of payments, there was a large real exchange rate appreciation and a boom-bust cycle, which ended with each country having accumulated staggering volumes of external debt. The most obvious lessons are that using the exchange rate as an anti- inflationary tool leads to major macroeconomic disturbances which undermine stabilization, and that a properly designed reform package should coordinate the opening of the current and capital accounts. Further, it was found that during a process of trade liberalization, exporters are particularly vulnerable to movements in the real exchange rate. Finally, in Chile and Argentina the phenomenal opportunities for financial speculation provided by the possibilities r arbitrage between domestic and foreign interest ratzs under the tablita - led firms to assume risky financial structures, ther!by setting the stage foz widespread banking crises when the tablita ended. These patterns of financial behavior were abetted by easy access to foreign credit and by the 4mplicit or explicit provision of commercial bank deposit insurance. These outcomes suggest that closer supervision of financial activity is advisable when financial systems that have been highly regulated for a long time are liberalized. Focusing on adjustment problems of .be oil-exporting countries, another study of the impact of windfall gains and economic management in these countries (Ref. No. 672-49) shows their performance did not match their promise because of their suboptimal use of profits from the oil price rise- both in terms of its public versus private absorption and intertemporal allocation between capital formation at home and foreign assets. They provide a cautionary tale on the use of windfall gains, which can be readily dissipated through inappropriate policies. Education A long-standing debate in education policy concerns the relative priority to be given to physical versus human capital formation for promoting economic growth. A comparative analysis of the economic profitability of investment in education in sixty countries has shown that: as judged by their social rates of return there is underinvestment at all levels of education, 1/ Official pre-announcement of future values of the exchange rate. - 36 - especially in Africa. As the social rate of return to primary schooling is higher than for secondary and higher education, it should have priority in investment. However, in many countries a subtantial fraction of the educational subsidy goes to higher education. Thus, a better allocation of resources would result if some cost recovery is implemented in higher education and the resulting resources were to be allocated to expand primary education. This policy would also be equitable, as universities are mainly attended by children from richer families. Past fears that educational expansion would lead to unemployed graduates or drastically lower social rates of return are unfounded, as time-series evidence shows a small decLine in the returns to education with a rise in the rate of investment. Agricultural Growth and Distribution Debates among economists about the distributional impact of the Green Revolution in Asia, or more broadly of agricultural growth, have by-and-large concentrated on the question of how the gains are distributed across farm size groups and between landowners and workers. Typical topics have included differential adoption behaviour, differential access to factors of production or credit, and the direct impact of technical change on labor demand. A recently completed research project on "Markets and Policy Determinants of Rural Income" (Ref. No. 672-39) in India, has extended this work by examining the general equilibrium effects of various policies. It yielded the following results. It found that daring the early Creen Revolution period (between 1965-66 and 1970-71), real rural per capita income in India rose by about eight percent. These early productivity gains were retained by the agricultural sector because of the Indian policy of reducing food imports pari passu with the rise in domestic production. But when near self-sufficiency was reached and foreign trade in grains virtually eliminated, all the extra domestic output was absorbed domestically, with the internal terms of trade moving substantially against agriculture. This transferred the benefits of the productivity gains to consumers. The study also found that major improvements in the incomes of the rural poor must eventually come mainly from demographic changes and growth in nonagricultural employment. The other avenue for substantially affecting their incomes -- direct income and land transfers -- increases food demand and under closed economy conditions leads to rising food prices, thereby eroding the gains to the rural poor to roughly 90 percent of the initial nominal transfer. More important than this erosion of benefits, however, is the effect these price changes have on shifting the burden of the tax required to finance the income or asset tranfers. Where the rural rich are the source of taxes (or land) to finance the income (or land) transfer, the rise in food prices and therefore in farm profits drastically reduces the real incidence of the tax on them and shifts it to the urban groups. In the case of more broad- based taxes such as an excise tax, the rural rich can even end up as net gainers from the income distribution because the increase in farm profits exceeds their tax burden. It should be noted that these conclusions i-uld not hold in a free trade sii.uation where food prices remained at a constant level. This emphasizes the crucial importance of trade policy on the real outcome of government policies. - 37 - B. Generic and Behavioral Issues An important part of the research program is devoted to the analysis of behavioral and generic issues which are relevant to the understanding of development processes such as Living standards and income distribution, tech- nological development, agricultural development, labor markets, urbanization, education and demography. Better uneerstanding of these processes and the development of analytical tools to help analyze relEvant issues are essential in guiding Bank Lending and the formulation of appropriate development poli- cies in the various sectors. Poverty and Distribution The Living Standards Measurement Study (LSMS) is concerned with the measurement of living standards and the development of analytical cools for understanding sources of differences in iiving standards among households. The objective is to develop a system that will provide policymakers in the Bank and in member countries with more accurate and timely information on the distributional effects of their decisions. The first phase of LSMS, now nearing completion, reviewed existing theory and methodologies to identify what data were necessary to meet LSMS's objectives. In its second phase, LSMS's first field trials have been launched in FY85; one in the Ivory Coast in conjunction with the research project on "The Distribution of Welfare in the Ivory Coast" (Ref. No. 673-22) and the second in Peru in the context of the research project on "Education and Informal Sector Employment" (Ref. No. 673-26). Another project on the "Evolution of Living Standards in Sri Lanka" found that a superficial reading of the data (and especially a crude comparison of unadjusted figures for 1969/70 and 1980/81) suggested that there was an apparent Large fall in food consumption and living standards between the endpoints of the decade of the 1970s; a more careful examination, however, shows that: (a) the crude comparison masks a steep fall foLlowed by a strong recovery; (b) adjusted data for the endpoint years show a reduced deterioration in living standards; and (c) by the early 1980s, food consumption and living standards had risen in a permanent long-term sense to levels approximately matching the artificial peak observed for 1969/70. The study also points out that Sri Lanka could not have avoided the reforms that it has undertaken, given the high cost of earlier policies combined with the external shocks experienced in the 1970s. The reforms were also accompanied by increased domestic rice production and a decline in the level of imports. Technology Firms' behavior in response to government policies in the area of technological development has been investigated in the context of the research project on "Acquisition of Technological Capability" (Ref. No. 672-48). Results, based on a comparison of four semi-industriaL countries (Mexico, Brazil, India and Korea) which have adopted widely different strategies in relation to their technological development suggest that public efforts to promote or control technological development have most often been - 38 - counterproductive. They also indicate that the openness of the economy provides incentive to firms to master imported technology in a cost minimizing and quality enhancing manner. Autarchiz technology policies impose extremely high costs, whilst autarchic trade policies discourage socially appropriate use of imported technology. A completed study on "Agricultural Innovations in India" (Ref. No. 672-14) investigated the importance of the small/large farmer dichotomy in explaining farm productivity differences in developing countries. One of the major conclusions of this research was that the popular view which has underpinned the case for Land reform that small farms are more efficient (with a higher land productivity) is exaggerated, as most of the observed differences in land productivity were explained by land quality differences. As a by-product, a theoretical model incorporating the costs of labor supervision was developed to explain why small farms may, ceteris paribus, have a higher average quality of land. Also, it was shown that farm size did not influence the adoption of fertilizers. Finally, a methodology was developed to measure land quality and the results show that the distribution of Land, adjusted for soil quality, is much more equal than the "raw" land distribution in India. Another project, the "Agricultural Mechanization and the Evolution of Farming Systems in Sub-Saharan Africa" (Ref. No. 673-16), concluded that: a) the transition from handhoes to animal-drawn plows is only profitable at higher intensities of farming; b) population growth and market access are the main determinants of agricultural intensification; c) in most circumstances, it is economically infeasible to bypass the animal traction stage and move directly to tractors. Industrial Policy The research project on "Productivity Change in Infant Industry" (Ref. No. 672-86) has accumulated a body of evidence on the nature and sources of long-term changes in production costs, with a focus on infant industries. The project has measured changes in production costs over time in terms of total factor productivity changes at the sectoral, subsectoral, and firm level, in both Egypt and Thailand. A clear pattern emerges at the sectoral and subsectoral levels, between exposure to competition, high productivity performance, and improvements in international competitiveness, with productivity change often offsetting major deteriorations in the terms of trade. This aggregate pattern is supported by evidence at the firm level. Factor Markets Research on the structure and functioning of the "Nigerian Labor Markets" and their interaction with developments in the macro-economy, particularly oil income fLows and the resulting changes in the real exchange rate, is part of an effort to develop an appropriate agricultural strategy for Nigeria. The issue is whether, in what sense and to what extent, Nigeria is a "high wage economy." The research shows that Nigeria's "high wages" were caused primarily by the overvalued exchange rate and that real wages--at least - 39 - in agricuLture--did not rise noticeably during the oil boom, although there almost certainly was an expansion in employment, particularly in the public sector. Since the end of the oil boom in 1981, real wages have, of course, been falling, and so has public sector and other formal employment. Another study on "Labor Migration among the Poor: The West African Case" examines the role that international migration plays in West African society and economy, emphasizing its socioeconomic effect and the extent to which international worker migration contributes to economic development. Urbanization Tn the urban sector, a research project on "Housing Demand and Finance" (Ref. No. 672-46) found: (i) Housing demand varies in a predictable way in developing countries, with Low-income households generally spending higher fractions of income for shelter than high-income households, and with all income groups spending higher fractions of income for shelter as the level of economic development increases; (ii) The lowest incone households, those with little or no assets of any kind, "finance" housing by progressive development, i.e. by upgrading very low quality units as funds become available; (iii) Theoretical work on tenure security suggests that some punitive government actions designed to reduce squatting may actually increase it. Additional work suggests that increasing security of tenure represents a net efficiency gain to society, not just a transfer to participants; (iv) An investigation of the experience of Cairo with rent control has shown a vacancy rate of almost 6 percent and a high rate of new construction despite enforced controls on monthly rents paid. In that market "key money" and other side payments are shown to largely equilibrate the market: when they are included, average rental prices are almost identical to the average of estimates of the long run competitive price. However, these averages mask large welfare gains and losses to individual tenants. Another research project on "Induscrial Location Policies" (Ref. No. 672-91) evaluates the effectiveness and relative inefficiencies of alternative policies intended to influence the location patterns of manufacturing employ- ment in SeouL (Korea). It found: (i) that a surprisingly small portion of firms (16 percent) moved in response to government policy actions such as incentive schemes and relocation orders in spite of the effective policy implementation records in Korea; (ii) small new firms and firms which required extra ;and for expansion tended to locate their operations just outside the restricted area where they could still gain access to Seoul's markets and services. This is consistent with previous findings that small firms spend their early years near the city center with easy access to essen- tial services and firms do not move long distance when they move. Transportation An ongoing study of the "Determinants of Demand for Personal Travel" (Ref. No. 673-05) relies in its first phase on the analysis of household expenditure surveys to provide: (i) a model to forecast the demand for travel in rural and urban areas with a given socioeconomic and demographic - 40 - composition of households and to measure the welfare effects of changes in the cost or the provision of travel facilities (whether infrastructure or services); (ii) a survey instrument applicable in developing countries that will cover people who currently travel as well as those who do not. A result of immediate interest is the share of travel in expenditures of poor households: even the poorest groups spend on travel and the proportion is sometimes unexpectedly high. While this research has some relevance to the question about the development effects of new transport facilities in hitherto unprovided areas (such as new penetration roads), much more empirical work is needed to throw light on that long-standing issue of special importance to Africa and to sparsely settled regions. Population During FY85, work on determinants of fertility and consequences of rapid population growth has continued, with increased emphasis on policy implications and with a special focus on Africa. One research effort explored the relationship between population and agriculture in Africa, the objective being to suggest ways in which agricultural sector development considerations can be integrated into population policy decisions and vice-versa. Another showed that the current levels of fertility in sub-Saharan Africa, resulting from a pattern of early and universal marriage and limited contraceptive use, would be even higher but for pervasive and prolonged breast-feeding. Similarly a recently completed research project in Bangladesh (RPO 672-70) found that age at marriage and the duration of breast-feeding rather than educational Levels or Landholdings, accounted for fertility differences across households. C. Specific Operational Issues In this category are grouped those research projects which are concerned with more narrowly focused operational needs, for instance in the evaluation and monitoring of Bank projects. Farm Extension and Mechanization A recently completed research project (Ref. No. 672-29) evaluated the impact of the Training and Visit Extension System on knowledge and adoption of improved farming practices, on input use, and on farm productivity. The key findings from the farm survey and its statistical analysis were: a) The area where T&V extension was introduced has a 6-7 percent gain in the productivity of wheat but no significant effects for rice compared to the area with traditional extension. The incremental investment in T&V extension yieles a rate of return of more than 15 percent. Most tf the extension-induced gains in wheat yield derive from farmer's improved access to timely and research- based advice concerning their specific production problems. The study area was very advanced even before the introduction of T&V extension, and no significant gain was identified in the use of high yielding varieties or fertilizers. b) There was no significant evidence that the productivity of smaller farmers increased less than that of larger farmers. - 41 - Transportation A large and extended research project on "Highway Design and Maintenance Standards" (Ref. No. 672-27) completed this year, was in engineering economics, which sought answers to question about the effects of road conditions on the cost of using roads, and of the effects of traffic on road condition, which together are an essential basis for road policy and taxation. The study found that often it is economical to build stronger roads than conventionally accepted and that the process of road deterioration is highly non-linear so that deferring infrastructural maintenance beyond a point leads rather suddenly to steep increases in the costs of both vehicle operating and road repair. As for the study on "Pricing and Taxing of Transport Fuels" (Ref. No. 672-83), it sought to answer two sets of questions, by way of analysis and empirical application to Tunisia: how to assess charges for the use of roads, and what to base those charges on (e.g., fuel or annual license fees); and what is the impact of changes in fuel prices (or taxes) on the price level and on real income distribution. Preliminary results in the latter enquiry indicate that the impact on both inflation and distribution of increasing fuel taxes can be readily offset, at no Lo3s to the revenue, by compensatory adjustments to other major taxes. Education One major question facing educational policymakers in developing countries is whether the secondary school curriculum should be "diversified" to include prevocational subjects. In fact nearly all Bank lending for secondary schools has included diversification of the curriculum with the hope that it will aid the transition of the graduates t- the world of work. A major research project (Ref. No. 672-45) studied dLversified curricula in Colombia and Tanzania. The main rationale for diversifying the curriculum (i.e., to improve the employment possibilities of the graduates) has not been supported by the data, as diversified curricula are difficult to implement and expensive. Nor does specialized training increase graduates' earnings; nor do vocational students end up in jobs that are better matched to their training than ither students. Where, say, 20 percent or less of the eligible age group is in school, access to secondary schooling and upward mobility could perhaps be expanded by the Least costly means--more conventional schools. Health and Nutrition The initiation of direct project lending for health has led to two principal areas of concentration of research: resource allocation within the sector, and resource mobilization (how should health services be paid for). A completed project in Mali assessed the demand for health, education and water services in poor rural areas, assessed the willingness to pay for new services and estimated the elasticities of demand for existing services with respect to fees, distance and service quality. The results showed less than the required - 42 - willingness to pay for community health worker activities except in the Largest villages, but adequate willingness to pay for well maintenance in all but the smallest villages. Another study of health service finance in developing countries found that there is considerable scope for users bearing a larger share of health care costs particularly for non-referral curative care. Research on nutrition has shifted toward identifying the impact of nutrition and health interventions through nutrition projects and components as well as the nutritional effects of agriculture and rural development policies and projects. A research project conducted in Kenya confirmed the results of previous studies that anemia limits worker productivity and parasitic infestation hampers child development. Another study on the "Benefit and Cost Analysis of Nutritional Interventions for Anemia Prevention" considered the effects of policies of medicinal supplementation and food fortification. The benefit-cost ratios of such interventions to reduce anemia appear to be large. A state-of-the-art review of nutrition education found that nutrition education can effectively promote the adoption of many low-cost or cost-free practices to improve the nutritional status of family members, particularly of children. - 43 - ANNEX 1. SUMMARIES OF EVALUATIONS OF COMPLETED RESEARCH PROJECTS This annex summarizes the results of a major exercise carried out this year by REPAC to evaluate a number of research projects which had been completed but not evaluated. Because of the backlog of projects requiring evaluation, the Research Policy Council decided to evaluate only those projects costing more than $100,000 e.ch. These 38 projects were classified under 3ix sectoral panels, each under the chairmanship of oce or two REPAC members, and were evaluated independently by an internal reviewer and also an external reviewer. These have been summarized into sectoral reports which are presented here. - 44 - 1. EVALUATION OF COMPLETED RESEARCH PROJECTS Approval Completion No, Title Date Date Duration A. AGRICULTURE 671-17 Analytics of Change in Rural 07/30/74 01/28/83 8 yrs. 6 mo. Communities 671-34 Management and Organization 07/07/75 09/02/81 6 yrs. 2 mo. of Irrigation Projects 671-42 Country Case Studies of Agri- 06/25/76 10/18/78 2 yrs. 4 mo. cultural Prices and Subsidies 671-45 Programming and Designing 09/27/76 06/15/84 7 yrs. 9 mo. Investment in the Indus Basin 671-57 Distribution of Income through 07/05/77 07/31/84 7 yrs. I mo. the Extended Family System 671-6a Adoption of Farm Technology in 03/28/79 08/07/81 2 yrs. 4 mo. Northern Nigeria 672-11 Agricultural Sector Analysis 02/01/80 05/13/83 3 yrs. 3 mo. Framework Study 672-67 Conditions for Sustained Farm 11/25/81 06/30/84 2 yrs. 7 mo. Mechanization B. PLANNING/GROWTH/COUNTRY ECONOMIC ANALYSIS 671-27 Social Accounts and Development 06/03/75 07/19/84 8 yrs. 2 mo. Models (SAM) 671-87 International Real Product 11/05/80 01/11/83 2 yrs. 2 mo. Estimates 672-25A Development of a SAM Basis for 11/05/80 08/07/84 3 yrs. 9 mo. Planning and Modeling in Egypt 672-26A Multi-Secto and Macro Economic 01/06//81 06/30/84 3 yrs. 6 mo. Models o Structural Adjustment for Yugoslavia - 45 - Approval Completion No. Title Date Date Duration C. INCOME DISTRIBUTION/LABOR/EMPLOYMENT 670-45 Labor Force Participation - 10/19/71 01/05/83 11 yrs. 2 mo, Income and Unemployment 670-83 Evaluation of Latin American 08/02/73 01/20/83 9 yrs. 6 ma. Data on Income Distribution 671-06 Employment Models and 06/25/74 08/07/84 10 yrs. I mo. Projections 671-08 Evaluation of Asian Data on 06/21/74 11/30/82 8 yurs. 5 me. Income Distribution 671-63 Labor Migration and Manpower 01/04/84 02/23/81 3 yrs. 1 mo. in the Middle East and North Africa 671-84 Wage and Employment Trends and 12/27/78 07/31/84 5 yrs. 7 mo. Structures D. INTERNATIONAL TRADE AND FINANCE/INDUSTRY/ENERGY 671-09 Natural Resources and Planning - 06/25/74 01/31/83 8 yrs. 7 mo. Issues in Trade and Investment 671-28 Linkage of Commodity and 06/03/75 01/21/83 7 yrs. 7 mo. Country Models 671-32 A Comparative Study of the 06/02/75 06/30/84 9 yrs. Sources of Industrial Growth and Structural Change 671-79 Sources of Growth and 06/13/78 06/30/84 6 yrs. Productivity Change: A Comparative Analysis 671-35 Export Incentives in Developing 07/07/75 07/31/84 9 yrs. Countries 671-59 Small-Scale Enterprise 10/31/77 06/30/84 6 yrs. 8 mo. Development 671-77 Appropriate Industrial 06/13/78 02/01/84 5 yrs. 7 mo. Technology 671-85 The Industrial Incentive 03/28/79 08/12/83 3 yrs. 4 mo, System In Morocco - 46 - Approval Completion No, Title Date Date Duration 671-86 Standards of Rural 03/28/79 04/10/84 5 yrs. Electrification 671-92 Industrial Statistics 07/09/79 11/09/82 3 yrs. 4 mo. 672-41 Changes in Comparative Advast- 06/26/81 06/30/84 3 yrs. tage in Manufactured Goods E. URBANIZATION AND REGIONAL DEVELOPMENT 671-20 Urban Traffic Restraint 08/07/74 01/25/83 8 yrs. 6 mo. - Singapore 671-47 Strategic Planning to 02/08/77 06/30/84 7 yrs. 4 mo. Accommodate Rapid Growth in LOC Cities 672-13 National Spatial Policies: 02/04/80 07/24/84 4 yrs. 5 mo. Brazil and Korea F. EDUCATION/POPULATION/HEALTH 671-38 Narangwal Population and 02/18/76 06/30/82 6 yrs. 4 mo. Nutrition 671-60 Textbook Availability and 10/31/77 06/06/84 6 yrs. 7 mo. Educational Quality 671-61 Socio-Economic Aspects of 10/31/77 02/26/82 4 yrs. 4 mo. Fertility Behavior in Rural Botswana 671-70 Case Studies of Determinants 12/31/77 06/01/84 6 yrs. 5 mo. of Recent Fertility Decline in Sri Lanka and South India 671-74 Economics of Schistosomiasis 02/23/78 06/30/84 6 yrs. 4 mo. Control Activities 672-01 A Comparative Study of Labor 07/12/79 06/30/84 4 yrs. 11 mo. Market Consequences of Educational Expansion - 47 - EVALUATION PANEL ON AGRICULTURE The research program on agriculture focused on two major areas: (a) methodologies to assess the benefits and distributive effects of large expansion of irrigation systems as well as issues regarding the management of these systems; and (b) methodologies to evaluate alternative development policies applied to agriculture, in particular, the effects of alternative pricing policies. The quality of the different research projects varied considerably. Some of them were quite innovative, although quite coitly for a case-by-case replication. Others were less successful in the sense that the methodology was not clearly spelled out before the collection of iata. Several interesting country case studies were developed in order to evaluate alternative agricultural development strategies. Nevertheless, these efforts would have had a substantial additional payoff had they been summarized in a synthesis piece comparing different methodologies and country case studies. Future research in this area could be improved substantially by: (a) more careful specification of initial conditions, and examination of their implications as well as choice of assumptions and methodologies selected in the studies for generalizability of research results; (b) improving the translation of those research results which have obvious generalizability to other conditions in terms of policy and operational significance; and (c) increased emphasis on effective dissemination of research results by the publication of synthetic pieces of easy access to policymakers. Accessibility of research findings to Bank staff and especially the policymakers in developing countries have received relatively Little emphasis. Incentives to the staff doing research have not been explicitly geared to rewarding those who successfully complete and publish results and participate in the active dissemination of those results. Participation of research staff in dissemination to some extent is crucial in ensuring the continued policy and operational relevance of their research. Some REPAC resources should be allocated urgently to the distilling and dissemination of those completed studies, where such investment would have a high payoff. - 48 - EVALUATION PANEL ON PLANNINC/GROWTH/COUNTRY ECONOMIC ANALYSIS The four projects in the above group, have the common features of (i) attempting to provide improved quantification of economic performance and/or policy choices, and (for the two planning model related projects) (ii) general purpose models for policy analysis. The project on International Real Product Estimates (671-87) is in a class by itself. It was complementary with the larger Kravis et at ICP study supported by the Bank. Its most notable finding was that because of various offsetting effects real output indicators are insensitive to the assumptions made in the ICP about the productivity of services. The main achievement of the two projects (671-27 and 672-25A) to develop and apply SANs was in demonstrating the usefulness of SAMs as an accounting framework which allows checks to be made upon the quality and consistency of macroeconomic data in a country. The project 671-27 was less successful in its laudable objective of incorporating income distributional aspects into SAMs. The modeling attempts associated with these SAMs were however, not particularly useful for policy purposes because of the underlying weaknesses of the data base and the inability of the modeling framework used to take account of various dynamic and institutional aspects relevant for policy analysis. By contrast, the application of a CCE modeL in Yugoslavia (672-25A) was highly successful in part because of its relevance to the institutional framework in which it was applied. However, the attempt to convert it into a model to answer macroeconnmic questions was unsuccessful. The technical quality of most of the output produced by the projects was fairly good. The general lessons to be learned from all four projects are that first, standard tools in the economic kit such as SAMs and CCEs can, in particular cases, and in cee hands of good economists be usefully applied. Second, the desire to produce an all-purpose general planning model which can be routinely used like an engineering modeL is misplaced. Third, whilst it was useful for the Bank to have experimented with developing SANs and CCEs as policy models, the returns from this experiment in terms of the general usefulness and relevance of the models developed (except in the exceptional case of Yugoslavia) was not very high. - 49 - EVALUATION PANEL ON INCOME DISTRIBUTION, LABOR EMPLOYMENT One general impression emerging from these six projects is that of dispersion and heterogeneity not only between projects but also within many of the projects. Individual researchers, after having submitted to time- consuming reviews at the proposal stage, were then left largely to their own devices with very little supervision. As a result, not only have most of the projects taken years longer than had been intended, but the design and content of projects was allowed to diverge from the original objectives without evidence of attempts on the part of the Bank to correct the situation. Slippage, indeed, was so bad in some cases that the principal researchers left the services of the Bank or abandoned the project altogether before completion. A better link between achievement and financial rewards might have helped avoid this serious problem. Partly as a result of this, the output of the projects most often lacks a synthesis or even a published summary. Output usually consists of a series of papers, articles, sometimes not even published, which are of little or no use to the rest of the Bank, to policymakers or to the academic community. Little effort seems to have been made by Bank management to ensure that projects would end with a compact tangible and readily accessible product. Another recurrent theme is the underestimation by the research managers of the enormous difficulties (and costs) involved in collecting primary data suitable for many of the analyses approved by the research committee. The need to collect and organize data in some cases absorbed the bulk of the approved budgets and consequently led to a curtailment of the analytical parts of the research. As few of the projects were designed with a policy-relevant question in mind at the proposal stage, few ended up with policy-relevant conclusions. Two of the projects had to do with income distribution data reviews (RPO 670-83 and 671-08). Perhaps the most important positive legacy of the other projects is that several of them tested the widely-accepted paradigm that market imperfections in developing countries are so overwhelming that the workings of the labor market do not deserve empirical examination. Some of the projects in this sample played a major role in examining country situations in a historical perspective and with the help of very careful surveys (or careful analyses of existing surveys). The unanimous conclusion 1/ is that markets do indeed matter; that they function remarkably well in the course of development; and that pessimism based on a rigid "institutional" view of the development process is simply not backed up by * A sample of six projects is far too small to permit valid generalizations, particularly given the very broad area covered by the panel on distribution, labor and employment in developing countries. Consequently, the analysis should be taken as tentative. 1/ The project on labor migration and manpower in the Middle East and North Africa (RPO 671-63) does not, however, fall into this category, since it consists of a model which does not recognize the workings of the labo- market. - 50 - empirical evidence. This has played an important part in turning around the thinking of many Bank economists (indeed, "mainstream" Bank thinking is now consistent with the outcome of these research projects) and also economists outside the Bank. - 51 - EVALUATION PANEL ON INTERNATIONAL TRADE AND FINANCE/INDUSTRY/ENERGY Research in this category included eleven projects whose objectives were 1) to provide the analytic tools and data to analyze global supply and demand conditions of selected commodities; 2) to analyze the pattern of, and changes in, comparative advantage in the production and trade of manufactured goods; 3) to examine the sources uf industrialization and growth; 3) to analyze the role of incentives in promoting exports, employment generation and industrial development; 4) to deveLop a methodology for analyzing the sources of productivity differences among firms; and 5) to develop a methodology for the preparation and evaluation of designs and standards for rural electrification projects. In most cases, the objectives of the projects were met, and the strategies developed to address the problems proved adequate for the task. The research has mostly used state-of-the-art methodologies, applying them competently to development issues which previously had not been researched to the same extent or with the same rLgor. For the projects under review, there are only a few examples where new methodology development or significant adaptation took place. In general, the projects have provided valuable insights into important elements of the development process and policies. Examples are the modeling of worldwide commodity markets (especially for aluminum and copper), the analysis of export incentives (especially as regards the importance of access to tax-free inputs and credit), and the assessment of the role of small-scale enterprises in industrial development and employment generation. The findings of the latter project suggest that overall incentives play a central role in ensuring efficient (and appropriately labor-intensive) industrializatior. that special interventions in favor of small-scale enterprises need to be treated with considerable caution and cannot easily be justified on the basis of higher Labor intensity or efficiency of small-scale enterprises; and that specially designed interve-itions in support of smaLl- scale enterprises (or of traditional types of manufacturing techniques) can Lead to resource misallocation without offsetting distributional benefits. Similarly, a project on changes in comparative advantages in manufactured goods, employing the simple but effective statistical approaches developed in the earlier studies of the principal author was found to be interesting and original in its attempt to test the new theories of international trade under monopolistic competition. There has been much less empirical work in this field than on the Heckscher-Ohlin theory, and the research reported in this group of papers on intra-industry specialization is both important in itself and likely to stimulate further work by others. The attempt to distinguish between the impact of product differentiation and economies of scale on the pattern of intra-industry trade, for example, is particularly interesting aund important. However, this evaluation panel found that the use of comprehensive models to analyze complex policy issues has not proven to be very successful, although it has yielded valuable insights. Examples are the two multicountry - 52 - comparative studies on industrialization and growth. Although the projects carried forward significantly the methodologies on input-output and CCE modeling to analyze the sources of growth, and to some extent the implications of different strategies and policies of industrialization, they were less successful in analyzing policies and incorporating policy instruments in modeling in an explicit and quantitative form. As with a number of other projects, the researchers had also underestimated the difficulties of data collection, forcing..postponement of subsequent phases of the research. The evaluations also indicate that large research projects can easily go into divergent directions, unless carefully and closely managed by a homogeneous team of Bank staff and consultants working with a clear common methodology and without interruption. In fact, the pervasive delays, lack of summary documentation of project findings, and poor record on dissemination which has characterized some of the projects can readily be traced to excessive discontinuities in the staffing of research projects. The issue of the need for improved project design also arises with respect to the project on global supply and demand conditions of selected commodities where despite underlying high quality econometric work, innovative frameworks for specific models, and some excellent reports, the project was vaguely formulated in that it encompassed subjects that were not interrelated in a mutually supportive fashion, making it difficult to pull together overall findings. A number of projects point to important lessons for the improvement of future research. They emphasize the need for closer collaboration initiated early between researchers and the regional staff both to allow more flexibility in research design and to insure operational relevance. Although the project on appropriate industrial technology made an important contribution to analysis of technology choice and determinants of productivity in developing countries, operational staff were not involved in the research and the methodology involved has been used very little in Bank projects. Dissemination and the results of these projects should have been given higher priority, including feedback into the Bank's operational and policy work, which should be carefully designed and monitored. In all the projects reviewed, there was a serious underinvestment in dissemination of this kind. In most cases, researchers heve a built-in bias and incentives to write for an academic audience completely ignoring the needs of Bank economists. Research managers must alter these incentives. - 53 - EVALUATION PANEL ON URBANIZATION AND RECIONAL DEVELOPMENT The three projects dealt with under this subheading really addressed three distinct issues (i) traffic patterns and policies; (ii) urban growth and the economics of urban growth; and (iii) regional policy. While quite distinct in terms of subject matter, two major themes do emerge from the review of the findings and evaluation of these projects. The first theme relates to the validity of basic economic laws or regularities. For example the Bogota "City Study" suggests that cities whether in the developed or the developing world exhibit strong regularities in their pattern of development, supports the hypothesis that conclusions and policies based on fu:-damental behavioral findings are largely transferable and upholds the very significant oper4tional conclusion that markets play an important role in the allocation of resources in urban areas. By implication he "City Study" suggests that urban operational strategies need not treat each city as a special case; further that efficient city management will require appropriate economic policy and not just physical planning. Similarly, the findings of the research project on national spatial policies eiphasize the importance of analyzing the industrial location decisionmaking process with the basic tools cl eicroeconomic analysis. The researchers conclude that the best spatial policy consists of good sectoral policies and good sectoral policies emphasize economic efficiency. The second and related theme is that macroeconomic and trade policies, while not targeted to spatial or urban objectives, in fact have very important influence on urban and spatial development. Incentives policies not normally considered to be spatial in their impact (such as trade, exchange rate, fiscal, and credit policies) are found to have a strong spatial impact. They favor larger, more diversified centers and penalize secondary centers specializing in more traditional lines of production. A major finding is that reforms of these non-explicit spatial policies, which are seen as undesirable on non-spatial efficiency grounds, would also improve market signals and lead to more efficient location decisions favoring efficient decentralization of economic activity. The thrust of the findings is distinctively in favor of reducing or eliminating price and policy distortions, however well-intentioned, and allowing market forces to play a greater role in guiding industrial location decisions. - 54 - EVALUATION PANEL ON EDUCATION/POPULATION/HEALTH Although all dealt with human resource issues broadly defined, the six projects evaluated under this subheading ranged widely in terms of subject matter, objectives, and methodologies. One concerned the production of education in developing countries; two explored aspects of fertility decline; one tested models of service delivery in the area of health and family planning; one analyzed the interplay between formal education and labor markets; and one looked at costs of alternative approaches for controlling a major parasitic disease. Such diversity makes the reporting of general findings from these efforts difiicult but several themes do emerge with important implications for the design and management of future Bank research. First, and perhaps most important, the less closely a project is linked to operational activities, especially project design, the more demanding are requirements for (1) good management, and (2) effective dissemination. Although virtually all projects in this area were viewed by reviewers as potentially important to Bank operations those that scored highest with the Bank's nonresearch staff were, not surprisingly, those whose results led directly and unambiguously to project design recommendations. The best example of such a project is the wo-Ik on "Textbook Availability and Educational Quality." Projects that considered broader issues such as determinants of fertility or the functioning of labor markets faired less well in terms of their actual or perceived effect on Bank operations. To some extent this is to be expected: the more "basic" is the research, the less directly applicable to project or pr.gram design it is likely to be. However, there is also a clear sense in several reviews that shortfalls in dissemination contributed to a lack of direct applicability. Reviewers for virtually every broadly focused project bemoaned the lack of a true "final product" that synthesized findings and emphasized general lessons. Second, a number of projects in this group invested heavily in the collection of primary data. These data resources were considered to be of great potential value to the Bank and the human resource research community more generally, but their actual value has often fallen short of this potential. Two reasons for this shortfall stand out. First, data were usually closely held by the originating researchers for a considerable period of time, limiting the scope for a "competition of ideas" with regard to analysis of alternative hypotheses. Second, even had access been unlimited poor data documentation, at least as represented in published works, would have put researchers not directly connected with the original project at a serious disadvantage. Since primary data collection is often a costly undertaking the Bank may want to consider a more systematic approach to issues of both data documentation and access. Finally, large projects with vaguely defined objectives tended over the course of time to stray well beyond the confines of even those general constraints. This widening of the scope of analysis came in one or two - 55 - instances at the cost of the project's primary objective. While research is inherently an uncertain process, researchers should make more effort to fulfill the specific objective that originally motivated their efforts or provide a clear statement of why they did not do so. Overa,l, one is left with a sense that the projects in this group asked interesting and important questions but, with, perhaps, two exceptions, were less than completely successful in either answering those questions or "setling" their findings to prospective consumers within the Bank. One solution would be to require of each project a "policy summary" of no more than twenty pages highlighting major findings and their implications for Bank policy or project designs. - 56 - APPENDIX 1 RESEARCH PRIORITIES There are five broad areas which the RPC recommended and the Board approved in 1984, as important fields for research which would both support Bank operations as intermediate inputs as well as provide important final outputs to keep the Bank in the forefront of thinking on the economics of developing count0es. It is recommended that research be encouraged in these priority areas: - (1) Costs and Benefits of Government Intervention: Policy-Induced Distortions and Economic Incentives - This area includes an extension of studies of the incentive system in trade and agriculture to other types of distortions of relative prices and economic incentives. It would also include studies of incentives within various types of organizations - including private firms, public firms and public agencies, as well as more comparative studies on the size, causes and consequences of policy-induced distortions in product and factor markets. In addition, it includes studies of instances where government intervention was on balance helpful on grounds of efficiency and equity. Related to this is the important question of the appropriate timing and sequencing of policy reforms. (2) Interrelationships Between Institutions and Incentives - In this area, research would take account of the way institutional arrangements affect the impact of various policy measures. It would also cover studies of the behavioral determinants of the actions impinging on economic outcomes of both private and public agents; studies of alternative institutional arrangements for the regulation of firms and markets such as alternative contract forms, systems of property rights and job security legislation; the systems, rules and practices of the management of public firms and public agencies; the organization of the distribution of public services, including their financing by taxes, fees or rationing; the control of the budgetary system and reform of tax systems; the political economy of decisionmaking on economic policy; alternative public policy mechanisms to ionact upon the major determinants of fertility and mortality; and the general application of 'household economics' to questions concerning human resource development. (3) The International Economic Environment - Studies in this area would, for example, chart and analyze emerging trends in trade 1I Other relevant areas, of course, would not be excluded. - 57 - and capital flows in the global economy; consequences and policy options for developing countries of developments in international trade and financial markets; global and country specific aspects of develcping country indebtedness; prospects and problems of government and private capital flows to developing countries; the role of foreign aid in development. (4) The Relationship of Stabilization Measures to Long-Term Economic Development - Research in this area would be designed to understand the relationship of short-term macroeconomic policy measures to Longer term economic development. These studies would, for instance, analyze the real effects of past stabilization policies on long-term growth, including the determinants and interrelationships of the key macroeconomic relative prices - real exchange, wage and interest rates - over the medium and long-term course of development; and the appropriate sequencing of policy reforms which serve to correct distortions in both microeconomic as well as macroeconomic relative prices. (5) Economic Planning - The research effort should shift from the past emphasis on comprehensive planning models and project and sectoral planning techniques, towards studies of 'institutional planning' or 'institutional development' which concerns attempts to improve the mechanisms and institutional aspects of both markets and the public sector, by modification of existing rules and institutions and the creation of new ones. - 58 - Iusue Jly 1984 PaeI o(3 pag Operational Manual Statement The Word Bank_ __ RESEARCH PROJECTS APPROVAL COMMITTEE (REPAC) I. INTRODUCTION partmets and chief economists. When regional support of the proposed research project is cited as a major 1. The purpose of this Statement is to set out justification, the regional department(s) concerned will the rules and procedures governing the appraisal of be expected to make a contribution in the form of research proposals by the Research Projects Approval funds and/or staff time to the research project. Committee (REPAC). The main objectives of this system are the following: Comuct of Interest (a) to place responsibility with line managers for 5. Members of an ad boc subcommittee appoint- the substance and operational relevance of re. ed by the Chairman to review a proposal normally search proposals. and for seeing that proposals should not be from the same department(s) as the pro- conform to the research priorities to be laid posars sponsor(s) (or from the same vice-presidential down by the Research Policy Council (RPC). unit(s) if members are chief economists). Also members of REPAC with a substantive interest in a particular (b) to ensure the technical quality of research pro- proposal will not participate in the discussion and deci- posals: and sion making on that proposal (c) to expedite the research project approval pro- Collaborators 6. To ensure that Bank-sponsored research is of II. POLICY the highest quality. REPAC will encourage the use of the best available external collaborators in designing 2. REPAC has been established by RPC to eval- and executing research proposals. Primary responsibility at and recommend individual research projects for lfor proposing such collaboration will rest with submit- fiding from the External Research Budget (ERB). ting departments. Howevever. REPAC will be ready to help departments identify high quality external collabo- rators both as an input into the development of a IIL RESPONSIBILITY proposal and as a resource for executing an approved proposal. Departments may suggest research topics to 3. It is the responsibility of line managers to REPAC on which outside collaboration would be usefud. consult widely in the Bank to help ensure the institution- If REPAC concurs with these topics. it will in consulta- al relevance of research proposals and that they conform tion with the departments send these topics to a number to the research priorities laid down by RPC. of research institutes around the world to obtain com- pleted research proposals to be funded from ERB. RE- PAC in consultation with the concerned departments Re-&u Suport wnd Conmbtion would review them and advise on the best external collaborator for the particular topic. Such proposals 4. Studies involving specific countries or regions would be subject to the normal review procedures of should be coordinated by the sponsoring department(s) REPAC. When important topics within the RPC guide- with the appropriate regional program or projects de- lines have not come up as departmental proposals. RE- PAC may from time to time seek to interest departments in sponsoring proposals and help them to identifr exter- nal collaborators who could develop and conduct the 'See Organizational Manual Statement 3.50. proposed project. This reanma -r pepared for the gudwe of staff f the World Bank aid is nor necessary a complere nemnart of de =djects come Arasybesed odybypersome(ofde World Bank md IFCarodrssprfroavaakeri-edi ousit. It ay aor opeddished quoted or cied outsidr de World Bank and iC. No. 9.750 5 Issmd. July 1984 Page 2 of 3 pages Operational Manual Statement The Word Bank- IV. PROCEDURES REPAC. VPERS could ask REPAC to recon- sider its decision, but REPACs final recom- Review and Decision Procedures mendations on research proposals that are re- jected will not be overruled. The review and 7. Any request for ERB funding. regardless of decision procedures should take about two its nature. is subject to common procedures. as outlined months for projects above S 125.000. below. All requests for ERB funding should be submitted to the Secretary of REPAC in twenty copies. The Secre- A decision memorandum will be sent to project sponsors tary will immediately circulate them to all REPAC mcm- outlining the basis for the decision made and giving a bers. synopsis of external referee comments when such have been elicited. (a) For requests below 550.0.0. The Chairman will decide on these requests. after consulting mean- Meetint aervals and Quorum bers of REPAC. These requests are expected to be dealt with very expeditiously. 8. REPAC will meet at least once a month. To (b) For requests between 350.000 andS125.OThe transact business. REPAC must have a quorum of at Chairman will review these requests in consul- kast five members present at its meetings. The Chairman tation wirb an ad hoc subcommintee of REPAC can appoint a member of REPAC to act as Chairman tatinwitanadocs*bcomitteofRPACof REPAC mn his absence. and at least one external reviewer. Other inter- nal reviewers may also be used. The Chairman makes recommendations on these requests to Submission Deadline the Vice President. Economics and Research Staff(VPERS). who decides on projects recon- 9. Submit proposals above S125.000 by the last mended for funding. VPERS can ask the Chair- day of each month to enable the reviewing process to man and subcommittee members of REPAC be organized at the beginning of the monthly meeting to reconsider their decision on reserch prjects of REPAC. Other proposals may be submitted at any they have recommended for rejection, but the time to the Secretary of REPAC. final decision of REPAC on proposals that are rejected will not be overruled. The process is not normally expected to take more than Resubmisson of Proposals one month. 10. When REPAC decides against funding a pro- (c) - For requests above 5125,000 For each proposal posal. it will include in the decision memorandum a in this category. the Chairman of REPAC ap- recommendation on whether the proposal may be resub- points an ad hoc subcommittee of REPAC mitted. A recommendation in favor of resubmission members to review the proposaL The proposal will. in principle. mean that the revised proposal will be is subject to at least two high quality external reviewed by the same external referees. reviews and. ifconsidered necessary, to internal review by other Bank staff with relevant exper- ie. External reviewers will be chosen from a Resarch Preparade roster of external referees maintained by RE- PAC. The roster will attempt to cover as wide a 11. REPAC will fund preparatory work on project body of external reviewers as possible from proposals in cases where this is judged to be necessary. around the world. The subcommittee reports Such funds will not constitute a guarantee of favor- on the proposal to the full committee. which able consideration of the research proposal that fol- reviews it and makes a recommendation to lows. When a research proposal is not submitted follow- VPERS, who decides on projects recommended ing the use of preparatory funds. a report on the use of for funding. For research projects rejected by these funds will be required from the sponsor. This sortearnt w prepared for the guidmnce of staff of the World Berk and is not necenirt a conpkoe trearnr of the subjecs covere It a beaed mlybypersonnel ofe WoridBank andFCarothers specifaaltoiedos e it. Itayavnat bepubfished. quoted or ded ouzaid the World Bamk and IFC. - 60 - So. 9.70 Issued: July 198. Page 3 of3 pages Operational Manual Statement The World Bank Supplernmtries projects which are planned to extend beyond three years. .. Any exceptions will be reported to RP. 12. REPAC will not normally consider requests for supplementary funding of research work previously Projects Extendla Beyond Authezed Durden authorized in an ongoing research project. Exceptional circumstances will need to be established for such fund* ing. Requests for supplementaries to finance research 14. REPAC will request Controller's to close the work Rditional to thuat i the original proposal wil e b account of any project which is six months behind the subject to thie same review and decision p e authorized completion date (as shown in the original subcthe nw re sah prpos als d decision processesas proposal). unless its sponsors obtain a time extension the nw research Proposals. from REPAC on the basis of a proper justification. For ongoing projects a grandfather clause will apply. Durallo" of Re h Prqects i.e.. their books will be closed one year after the autho- rized completion date as shown in the originat proposal. 13. Normally REPAC will not.consider research This stammord was pepard for Mr gadice of st of Mr World BeAk and is or aecesordy a coiplee treautent of de subjecu comes Itnsy br ased onl by perme of t World B* adIFCor orkrspacaffyanuhorbed to ar it. I may nor bepubvsd. quoted or dred onvd de World Bamk and IFC - 61 - APPENDIX 3 RESEARCH POLICY COUNCIL MEMBERS RPC Anne 0. Krueger Vice President, Economics and Research (Chairperson) David Knox Vice President, Latin America and the Caribbean Regional Office Jose Botafogo Concalves Vice President, External Relations Shahid Husain Vice President, Operations Policy Joseph Wood Vice President, Financial Policy, Planning and Budgeting Deepak Lal Research Administrator, Economics and Research, Ex-officio Secretary. - 62 - APPENDIX 4 RESEARCH PROJECTS APPROVAL COMMITTEE MEMBERS REPAC D. Lal Research Administrator, Vice President's Office, Economics and Research (Chairman) A. Choksi C!ief, Trade and Adjustment Policy Division, Country Policy Department K. Dervis Chief, Industrial Strategy and Policy Division Industry Department D. de Tray Chief, Living Standards Unit, Development Research Department U.J. Lele Chief, Development Strategy Division, Development Research Department F.S. O'Brien Chief Economist, West Africa Regional Office G.P. Pfeffermann Chief Economist, Latin American and Caribbean Regional Office M. Selowsky Economic Adviser, Office of the Vice President, Operations Policy G. Tidrick Senior Economist, East Asia and Pacific Regional Office * Mr. J. Linn, Senior Economist, Country Programs Department, East Asia and Pacific Regional Office, replaced Mr. G. Tidrick in June 1985. - 63 - APPENDIX 5 Editorial Board of the Research News Editor: Bruce Ross-Larson (Consultant) Editorial Board Members: Dennis de Tray, Chairman (DRDLS) Vinod Dubey (CPDDR) Michael Finger (DRDIE) Peter Muncie (PUBDR) Stephen O'Brien (WANVP) Managing Editor: Oey Astra Meesook (VPERS) - 64 - APPENDIX 5 Editorial Board of The World Bank Research Observer Editor: George Psacharopoulos (EDTRS) Contributing Editor: Rupert Pennant-Rea (Consultant) Assistant Editor: Francesca Jessup (VPERS) Editorial Board Members: Vittorio Corbo (DRDDR) Enzo Grilli (EPDDR) Peter Muncie (PUBDR) Demetrios Papageorgiou (CPDTA) David Turnham (AEPDR) WilLiam Tyler (LCPDR) Managing Editor: Oey Astra Meesook (VPERS) - 65 - APPENDIX 5 Editorial Board of The World Bank Economic Review External Members: Professor Assar Lindbeck, Institute for International Economics, Stockholm Professor T. N. Srinivasan, Yale University Professor Joseph Stiglits, Princeton University Internal Members: Deepak Lal, Research Administrator, ex officio Mark Leiserson, Managing Editor, ex officio Sarath Rajapatirana Anandarup Ray Marcelo SeLovsky - 66 - APPENDIX 6 GUIDELINES FOR EVALUATION OF COMPLETED RESEARCH PROJECTS The principal objectives of evaluation as applied to completed Bank research projects are illustrated below. These are in the form of questions for discussion at evaluation panel meetings. These questions, taken together, are an attempt to determine how effectively the research project has met its goals and how useful the project has been in improving knowledge of deveLopment issues. While not intended as exhaustive, questions are grouped into headings which are suggested as an organizing format for the report on the panel's findings. The evaluation reports that we receive are not uniform in character; this makes it difficult to compare the relative quality of different research projects. In the interest of uniformity, it is strongly urged that the format presented below be followed as closely as possible. However, as noted above, the questions are not intended to be exhaustive. Therefore, if necessary, evaluators should not hesitate to broaden the scope of the evaluation. A. Objectives, Strategy, and Results 1. What general questions did the study seek to answer? Whar answers did it find? How significant are these answers for a) Development policy in generaL? b) Bank operations? 2. To what extent did the study fulfill its objectives? 3. Were the objectives of the study clearly formulated? Did they change as the study was undertaken? 4. Who are the intended beneficiaries? (Bank staff; planning authorities and decision makers in developing countries; other researchers). 5. Has the project assisted in developing research or other analytical capacity in the countries under study? 6. Were efforts made to coordinate work with other studies underway in the Bank or outside, to enhance the comparability of results or avoid duplication? B. Design 1. Does the research improve in specific ways upon a welL- established methodology, or is the analytical framework relatively innovative? - 67 - 2. Were the theoretical approaches and the methodology employed in the study appropriate to its stated purposes? Were difficulties encountered in applying the methodology? If so, how were they overcome? 3. How reliable were the data? Does their reliability depend on the design and coverage of sample surveys conducted as part of the project? If so, were such surveys properly designed and carried out, and their results adequately incorporated in the research? C. Organization 1. Did the research tasks foLlow a logical sequence? Were there opportunities to review progress at intermediate stages? 2. How effective were the consultants or consulting firms employed? How open were the channels of communication between Bank staff and consultants? 3. Was the extent of Bank staff involvement in design, implementation, and supervision adequate to meet the study's objectives? 4. What was the nature and extent of awareness, support, or participation among: -- Bank operating departments, including regional departments? -- Local research institutes? -- Government agencies; D. Dissemination 1. Are the research outputs written and presented in a manner which makes them accessibLe to the intended audience(s)? 2. By what means have findings been communicated to the intended beneficiaries? E. Cost 1. How does the overall cost and efficiency of the study compare with initial estimates? Did it take longer than expected? Were there significant cost overruns? 2. What appreciation, however broad, can be given of cost- effectiveness? - 68 - F. Summary 'hat lessons for the conduct of future research projects are suggested from the above? - 69 - APPENDIX 7 Seminar Series on the "Frontiers of Economics" Speakers have discussed a broad range of economic analysis and research. The first ten seminars are: Alex Leijonhufvud "Whatever Happened to Keynesian Economics?" Edward Leamer "Let's Take the Con Out of Econometrics: Sensitivity Analysis for Economic Data" Mancur Olson "The Decline of Nations: Afterthoughts" Robert Lucas "On the Mechanics of Economic Development" Avinash Dixit "Current Developments in Trade Theory: A Selective Survey" Thomas Sargent "Where Do the Econometric Battles on Rational Expectations Now Stand?" James Buchanan "The Public Choice Perspective" Robert Barro "New Developments in the Theory of Rules Versus Discretion" Sherwin Rosen "Implicit Contracts" Gary Becker "Population and Economic Development"