Why is Unemployment So High in Bulgaria?
Why is Unemployment So High in Bulgaria?

Author: Jan Rutkowski

Publisher: World Bank Publications

Published: 2003

Total Pages: 68

ISBN-13:

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Rutkowski seeks to determine the main factors behind poor labor market outcomes in Bulgaria. Unemployment in Bulgaria is high and of long duration. The accumulation of the unemployment stock has been caused by relatively high inflows into unemployment coupled with limited outflows. These features of the Bulgarian labor market are typical of other transition economies in Central Europe and exploring their sources is of broad interest. Rutkowski focuses on determinants of and constraints to job creation. He uses data on job creation and job destruction from a survey of employment in all registered firms. He finds that the source of large inflows into unemployment is intensive enterprise restructuring associated with a high pace of job reallocation. However, job creation falls short of job destruction. Three main factors account for the limited job creation and hiring, and thus for low outflows from unemployment: - The unfriendly business environment, reflected by a low rate of new firm formation, and a relatively small SME (small and medium enterprise) sector. - Labor market rigidities, including excessive hiring and firing costs. - Skill and spatial mismatches brought about by enterprise restructuring, as well as low skills and marginalization of the long-term unemployed who cannot successfully compete for new jobs. The author recommends a three pronged strategy to improve labor market performance: (1) removing bureaucratic constraints to entry and expansion of firms; (2) enhancing labor market flexibility through lowering hiring and firing costs; and (3) improving the educational system so as to equip workers with broad and portable skills. This paper - a product of the Human Development Sector Unit, Europe and Central Asia Region - is part of a larger effort in the region to examine labor market performance and its contribution to economic growth and poverty reduction.

Poverty and Social Protection in Bulgaria
Poverty and Social Protection in Bulgaria

Author: Jean-Jacques Hallaert

Publisher:

Published: 2020-07-31

Total Pages: 34

ISBN-13: 9781513550190

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Absolute poverty has dropped markedly in Bulgaria but income inequality has increased substantially in the aftermath of the GFC. This increase is due to a rise in market income inequality that was compounded by a reduction in fiscal redistribution. The redistributive role of direct taxation has declined with the introduction of a flat tax and social spending is relatively low and decreasing (as a share of GDP), is concentrated on a few social risks, and experienced a decline in its redistributive efficiency. The COVID-19 crisis is likely to deepen income inequality, increasing the room for redistributive policies.

Explaining Unemployment in Spain
Explaining Unemployment in Spain

Author: Mr.Jeffrey R. Franks

Publisher: International Monetary Fund

Published: 1994-09-01

Total Pages: 42

ISBN-13: 1451852576

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Spain has the most serious and persistent unemployment problem in Europe, with an unemployment rate that reached 24.6 percent in early 1994. This paper explores the characteristics of this unemployment problem, its causes, and provides a brief discussion of recent labor market reform measures and their likely Impact. A demographic shift in recent years has produced a large rise in female labor force participation and a decrease in agricultural jobs to which the economy has been unable to adjust. The effects of generous unemployment benefits and the large underground economy may explain 6–12 percentage points of the resulting unemployment, but the remainder must be explained by failures and rigidities in the labor market. The paper presents econometric evidence that unemployment displays hysteresis, and that wages are not responsive to changes in the unemployment rate. This evidence supports the claim that insider-outsider factors and rigidities in the legal structure of the labor market are responsible for much of the high unemployment rate. Recent reforms have improved the functioning of the labor market, but they are unlikely to be sufficient to reduce unemployment to single digit rates without further action.

Bank Supervision and Corporate Finance
Bank Supervision and Corporate Finance

Author: Thorsten Beck

Publisher: World Bank Publications

Published: 2003

Total Pages: 52

ISBN-13:

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We examine the impact of bank supervision on the financing obstacles faced by almost 5,000 corporations across 49 countries. We find that firms in countries with strong official supervisory agencies that directly monitor banks tend to face greater financing obstacles. Moreover, powerful official supervision tends to increase firm reliance on special connections and corruption in raising external finance, which is consistent with political/regulatory capture theories. Creating a supervisory agency that is independent of the government and banks mitigates the adverse consequences of powerful supervision. Finally, we find that bank supervisory agencies that force accurate information disclosure by banks and enhance private monitoring tend to ease the financing obstacles faced by firms.

Telecommunications Reform in Malawi
Telecommunications Reform in Malawi

Author: Frew Amare Gebreab

Publisher: World Bank Publications

Published: 2003

Total Pages: 64

ISBN-13:

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In 1998 the Government of Malawi decided to reform its telecommunications sector. Although the reform was ambitious in some ways, it was modest when compared with the most ambitious reforms adopted elsewhere in Sub-Saharan Africa. The two main accomplishments were splitting the incumbent fixed line monopoly, the Malawi Post and Telecommunications Corporation, into two companies-Malawi Telecommunications Limited (MTL) and Malawi Post Corporation (MPC)-and issuing two new cellular licenses to two new private entrants. In addition, the Government also established a new regulator which was separate from, but heavily dependent on, the Ministry of Information and liberalized entry in value-added and Internet services. However, the Government had neither privatized the fixed-line telecommunications operator nor introduced competition in fixed-line services by the end of 2002. Clarke, Gebreab, and Mgombelo discuss sector performance before reform, details of the reform, the political motivation for reform, and events in the five years following the reform. The reform yielded mixed results. Although cellular penetration and Internet use expanded dramatically following reform, prices increased, especially for cellular calls, and fixed-line penetration remains low by regional standards.

Regulation and Private Sector Investment in Infrastructure
Regulation and Private Sector Investment in Infrastructure

Author: Sheoli Pargal

Publisher: World Bank Publications

Published: 2003

Total Pages: 48

ISBN-13:

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The author assesses the importance of the regulatory framework as a determinant of private sector investment in infrastructure. She uses recently compiled data on private and public sector investment in the water, power, telecommunications, railroads, and roads sectors between 1980 and 1998 in nine countries in Latin America. The author finds that the most significant institutional determinant of private investment volumes is the passage of legislation liberalizing the investment regime. This is important because it indicates that the legal basis for reform is probably more critical in determining the quality of the investment climate than specific aspects of the institutional framework governing private sector participation. In accordance with intuition, the author's results indicate that government action to increase regulatory certainty and minimize the perceived risk of expropriation through the establishment of independent regulatory bodies is a critical determinant of the volume of private investment flows. She also finds that the general relationship of private to public investment is one of substitutability.

Integrating the Least Developed Countries Into the World Trading System
Integrating the Least Developed Countries Into the World Trading System

Author: Paul Brenton

Publisher: World Bank Publications

Published: 2003

Total Pages: 36

ISBN-13:

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Trade preferences are a key element in industrial countries' efforts to assist the integration of least developed countries (LDCs) into the world economy. Brenton provides an initial evaluation of the impact of the European Union's recently introduced "Everything but Arms" (EBA) initiative on the products currently exported by the LDCs. He shows that the changes introduced by the EBA initiative in 2001 are relatively minor for currently exported products, primarily because over 99 percent of EU imports from the LDCs are in products which the EU had already liberalized, and the complete removal of barriers to the key remaining products-rice, sugar, and bananas-has been delayed. Brenton looks at the role EU preferences to LDCs in general have been playing and could play in assisting the integration of the LDCs. He shows that there is considerable variation across countries in the potential impact that EU preferences can have given current export structures. There is a group of LDCs for whom EU trade preferences on existing exports are not significant since these exports are mainly of products where the most-favored-nation duty is zero. Export diversification is the key issue for these countries. For other LDCs, EU preferences have the potential to provide a more substantial impact on trade. However, the author shows that only 50 percent of EU imports from non-ACP (Africa, Caribbean, and Pacific) LDCs which are eligible actually request preferential access to the EU. The prime suspect for this low level of use are the rules of origin, both the restrictiveness of the requirements on sufficient processing and the costs and difficulties of providing the necessary documentation. More simple rules of origin are likely to enhance the impact of EU trade preferences in terms of improving market access and in stimulating diversification toward a broader range of exports.

Does a Country Need a Promotion Agency to Attract Foreign Direct Investment?
Does a Country Need a Promotion Agency to Attract Foreign Direct Investment?

Author: Jacques Morisset

Publisher: World Bank Publications

Published: 2003

Total Pages: 28

ISBN-13:

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Establishing an investment promotion agency has become a central part of most countries' development strategies. Today there are more than 150 investment promotion agencies worldwide. Yet very little is known about what these agencies have been really doing, notably in emerging countries, and whether they have been effective in influencing investors' decisions. Using data from a new survey on 58 countries, Morisset shows that greater investment promotion is associated with higher cross-country foreign direct investment (FDI) flows, on top of the influence of the country's investment climate and market size. But this result has to be qualified on several counts. First, the effectiveness of the agency depends on the country's environment in which it operates. An agency in a poor investment climate is less effective at attracting investment. Second, the scope of activities that an agency undertakes influences its performance. Morisset's empirical analysis indicates that agencies devoting more resources on policy advocacy are more effective because such activity is not only beneficial to foreign investors but also to domestic investors. In contrast, investment generation or targeting strategies appear expensive and risky, especially in countries with poor investment climates. Finally, certain internal characteristics of the agencies are associated with greater effectiveness. The agencies that have established reporting mechanisms to the country's highest policymakers (the president or prime minister) or to the private sector have been systematically more efficient at attracting foreign direct investment. Such institutional links are crucial because they contribute to strengthen the government's commitment as well as reinforce the agency's credibility and visibility in the business community.

The Impact of Bank Regulations, Concentration, and Institutions on Bank Margins
The Impact of Bank Regulations, Concentration, and Institutions on Bank Margins

Author: Asl? Demirgüç-Kunt

Publisher: World Bank Publications

Published: 2003

Total Pages: 64

ISBN-13:

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This paper examines the impact of bank regulations, concentration, inflation, and national institutions on bank net interest margins using data from over 1,400 banks across 72 countries while controlling for bank-specific characteristics. The data indicate that tighter regulations on bank entry and bank activities boost net interest margins. Inflation also exerts a robust, positive impact on bank margins. While concentration is positively associated with net interest margins, this relationship breaks down when controlling for regulatory impediments to competition and inflation. Furthermore, bank regulations become insignificant when controlling for national indicators of economic freedom or property rights protection, while these institutional indicators robustly explain cross-bank net interest margins. So, bank regulations cannot be viewed in isolation. They reflect broad, national approaches to private property and competition.