Measuring Efficiency of Macro Systems: An Application to Millennium Development Goal Attainment

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    ERD Working Paper No. 66

    Measuring Efficiencyof Macro Systems: An Application

    to Millennium Development GoalAttainment

    AJAYTANDON

    March 2005

    Ajay Tandon i s an Economist in the Development Indicators and Policy Research Division of the Economics and Research

    Department , Asian Development Bank. The aut hor t hanks Eric Suan f or research assistance.

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    Asian Development BankP.O. Box 7890980 ManilaPhilippines

    2005 by Asian Development BankMarch 2005ISSN 1655-5252

    The views expressed in this paperare those of the author(s) and do notnecessarily reflect the views or policiesof the Asian Development Bank.

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    FOREWORD

    The ERD Working Paper Series is a forum for ongoing and recentlycompleted research and policy studies undertaken in the Asian DevelopmentBank or on its behalf. The Series is a quick-disseminating, informal publicationmeant to stimulate discussion and elicit feedback. Papers published under thisSeries could subsequently be revised for publication as articles in professional

    journals or chapters in books.

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    CONTENTS

    Abstract vii

    I. Theoretical Background 2

    A. Outputs 2B. Inputs 3

    C. Exogenous Determinants 3

    II. Empirics of Efficiency Measurement 5

    A. Deterministic Frontiers 5B. Stochastic Frontiers 7C. Measuring Efficiency: A Simple Framework 8

    II I . Efficiency of the Health System in Indonesia:A Subnational Application 10

    IV. Conclusions 13

    References 14

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    ABSTRACT

    At least part of the effort toward MDG attainment in the social sector couldcome fromimprovements in efficiency of delivery mechanisms. Hence, it is importantto know which countriesor which regions within countriesare able to attainhigher MDG outcomes even after controlling for resource inputs. This informationcan be useful for policymakers and enable a second-stage analysis ofwhyis itthat some are doing better than others. This paper reviews the methodology formeasuring efficiency in macro systems using the health and education sectorsas examples. A simpler characterization of efficiency that is less dependent oneconometric specifications is introduced. As an example, this method ofmeasuring efficiency is applied to assess health system outcomes at the district(kabupatam) level in Indonesia.

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    The UN Millennium Declaration, which was adopted by 189 countries in September 2000, hasfocused attention on the attainment of eight Millennium Development Goals (MDGs) by 2015.

    The goals, which are reflective of a fairly broad conceptualization of development, include targetsfor poverty reduction, gender equality, environment sustainability, educational attainment, as wellas health improvements (UNDP 2003). This focus on MDGs has resulted in renewed attention towardmeasurement and monitoring issues, as well as on projections of indicators to 2015 to assess whichcountries are on track. In addition, there have been attempts to identify resource, institutional,and other constraints to MDG attainment (World Bank 2004).

    There is a general consensus in the development community that at least part of the efforttoward MDG attainment (and this is especially true for the social sector) could come from improvedefficiency of existing delivery mechanisms (J ayasuria and Wodon 2003). Whereas it is true thatmacroeconomic growth would facilitate improvements in human development, the positive spillovereffects from economic growth to the social sector are not as big as they might be for income povertyreduction (World Bank 2004). Furthermore, there is empirical evidence that suggests that high levelsof economic development are not necessarily a prerequisite for high levels of human development.One reason is that, given the labor-intensive nature of service provision, the supply of health andeducation costs relatively less in poorer countries (Dreze and Sen 1989). Hence, the same levelsof health and education outcomes can be achieved at far lower resource outlays in low-incomecountries. Two oft-cited example are those of Sri Lanka and the state of Kerala in India. Theimplications are that resource constraints can, at least in part, be offset by good governance, effectiveinstitutions, political will, or other such factors.

    In order to identify efficiencies, the first step is to identify which countries as well as whichregions within countries have been relatively successful in MDG attainmentaftercontrolling for resourceinputs. A second step would be to then examine whyis it that some countries are doing better thanothers in their resource-level group in achieving MDG outcomes. If a given country is found to berelatively efficient but has yet to attain a given MDG then this would imply that additional resourceoutlays are most likely going to be required for achieving further progress. I f, on the other hand,a country is relatively inefficient then this suggests that both increases in efficiency at current resourcelevels as well as increases in resource outlays are potential pathways to MDG outcome increases.In addition, identification of inefficiencies is a first step toward understanding factors that contributeto inefficiencies: some of these may be policy-related, but others may be factors that are beyondthe immediate control of governments (e.g., external shocks, civil strife, etc.).

    The problemof estimating MDG efficiency is similar to the classic problemof estimating technicalefficiency in industrial and agricultural economics, whereby efficiency in converting inputs into outputsis inferred from how far the output of a given production unit is from the maximum output (thefrontier). This paper summarizes the methodology as applied to MDG attainment for two macrosystems, namely the health and education sectors. The paper is based in part on Tandon et al.(2003). The paper outlines a simpler way to characterize efficiency that is more transparent and

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    less dependent on specific econometric assumptions. The paper concludes with a discussion ofthis approach in helping identify policy-dependent factors that can have an effect on improvingthe efficiency of MDG outcomes. These issues are especially relevant for human development inAsian DMCs as most projections show that, even though progress on income-related MDGs has been

    encouraging, the prognosis for achieving social-sector and other nonincome MDGs by 2015 is notpositive for the region as a whole (ADB 2004).

    I. THEORETICAL BACKGROUND

    In the production function literature, technical efficiency is defined as output relative to themaximum output for given input levels (Kumbhakar and Lovell 2000). Usually, one way to assessefficiency is to estimate a frontier production function (the maximumobserved output for all availableinput levels).1 Once the frontier has been identified, then distance from the frontier is a measureof efficiency [b/ (a+b) in Figure 1]. Figure 1 shows one example with two countries having the sameoutput. However, because country A is able to achieve the output at a lower level of inputs thancountry B, it is deemed to be more efficient. The first step in applying this framework to MDG attainmentis to conceptualize the pertinent sectors as production units. In this paper, we consider applyingthe efficiency framework to health and education-related MDG attainment and this impliesconceptualizingat least metaphoricallythe health sector and education sector as production-oriented macro systems. The next steps are to specify inputs, outputs, and other factors that canhave an influence on the production process.

    A. Outputs

    As the concern is to assess the efficiency of MDG attainment, the relevant MDG indicators canbe assumed to represent outputs of the respective sectors.2 So, for instance, for the education sectorwe take net primary enrollment ratio as an indicator for the following MDG education target:

    Ensuring that, by 2015, children everywhere, boys and girls alike, will be able to completea full course of primary schooling.

    Similarly, we take under-five morality rate as an indicator for the following MDG health target:

    Reducing by two-thirds, between 1990 and 2015, the under-five mortality rate.

    1 This approach is the macro approach. A micro approach to measuring efficiency would identify the set of availableinterventions that yield the maximum possible outcomes.

    2 In several instances, there are multiple indicators of any given MDG target. This multiplicity can be taken into accountby constructing an output index. For expository purposes, for now we focus only on one of the indicators each forthe health and education MDG targets.

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    3ERD WORKINGPAPERSERIESNO. 66

    SECTIONI

    THEORETICALBACKGROUND

    B. Inputs

    Inputs refer to (controllable) sectoral factors that contribute to attainment of the chosenMDG indicators. The idea here is to take into consideration resources at the disposal of the respectivesectors.3 For this purpose, inputs could be public expenditure allocations, existing capital, buildings,labor employed in the health and education sectors, etc.

    C. Exogenous Determinants

    These are factors that are not directly related to resources in the sector in question, but mayhave an effect on the relationship between inputs and outputs. I n other terms, this refers to factorsthat characterize the environment within which the production is taking place. So, for instance,educational attainment could be considered an exogenous determinant of health in that, for thesame resource input, higher educated populations are likely to have systematically higher healthoutputs. Similarly, controlling for the level of sectoral expenditure, a higher shareof that sector intotal expenditure may serve as a proxy for political commitment to that sector and may have a positiveinfluence on outcome attainment.

    Frontier

    Country A Country B

    FIGURE1

    FRONTIERPRODUCTIONFUNCTIONANDTECHNICALEFFICIENCY

    FIGURE1FRONTIERPRODUCTIONFUNCTIONANDTECHNICALEFFICIENCY

    Input

    Ou

    tpu

    t

    aa

    b b

    3 It is important to note that we are not estimating a full production function, in that we are not taking into accountall factors that contribute to the achievement of outcomes: we are only considering resources at the disposal of therespective sectors as inputs. Other factors influencing outcomeswhich include socioeconomic, behavioral, institutional,and environmental factorscan be incorporated as exogenous determinants characterizing the environment within whichconversion of input resources to outcomes occurs.

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    84

    SIN

    Netprimaryerollmentratio

    (Proxyforoutput)

    Teacher-pupil ratio, primary(Proxy for input)

    Source: World Development Indicators (2004)

    MONKAZ

    SAMPHI

    TAJ MALTON

    MLDFIJ

    FIGURE2

    EDUCATIONANDHEALTHSECTORPRODUCTIONFUNCTIONS

    FIGURE2EDUCATIONANDHEALTHSECTORPRODUCTIONFUNCTIONS

    VIEPRC

    KOR

    INO

    CAM

    BAN

    INDMYA

    KGZLAO

    PNGAZE

    PAK

    Education Sector Production Function

    .1.08.06.04.02

    20

    40

    60

    80

    100MAL KOR

    NRUPLW

    SRI

    UZBINO

    VAN

    KGZ

    VIEPHIKAZPRCTHASAM

    TONFIJ

    RMIMLD

    FSMTKM

    KIRSOLMON

    PNGPAK

    NEPBHU

    IND

    MYA

    BANAZE

    TAJ

    LAO

    AFG

    Health Sector Production Function

    1000minusunder-fivemortalityr ate

    (Proxyforoutput)

    1000

    900

    800

    700

    2 6

    Health expenditure per capita, PPP log scale(Proxy for input)

    Source: WHOStatistical Information System(2004)

    NEP

    CAM

    4 Due to problems related to data completeness, only one input indicator is used as a proxy for this analysis.

    Table 1 summarizes the application of this theoretical framework to the measurement of MDGefficiency in the education and health sectors. Figure 2 plots the education and health sectorproduction functions using data from 2000 (Asian DMCs highlighted).4 As can be seen, both sectorsexhibit properties of standard production functions: increases in inputs appear on average to increase

    output, albeit at a diminishing rate.TABLE 1

    CONCEPTUALIZINGTHE EDUCATIONANDHEALTHSECTORSASPRODUCTIONUNITS

    MACRO SYSTEM OUTPUT INDICATOR INPUT INDICATORS EXOGENOUS(MDG INDICATOR) DETERMINANTS

    Education Sector Net primary enrollment Primary school expenditure Governance indicatorsratio (%) per capita Social capital indicators

    Primary pupil-teacher Poverty rateratio Population density

    Percent of totalexpenditure to sector

    Health Sector Under-five mortality rate Health expenditure perper 1,000 (reported capitainversely as 1,000 minus Hospital bedsthis rate) Medical personnel per

    capita

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    5ERD WORKINGPAPERSERIESNO. 66

    SECTIONII

    EMPIRICSOFEFFICIENCYMEASUREMENT

    II. EMPIRICS OF EFFICIENCY MEASUREMENT

    Econometrically, the frontier production function and efficiency can be estimated using two

    sets of approaches: (i) a deterministicapproach, or (ii) a stochasticapproach (Kumbhakar andLovell 2000). A key difference between the two approaches has to do with how each conceptualizesthe data-generating mechanism. In the deterministic approach, the frontier is estimated such thatall observed data points lie below it, and all deviations fromthe frontier are attributed to inefficiency.In the stochastic approach, at least some of the deviations from the frontier are allowed to beattributable to factors other than inefficiency (e.g., to measurement error).

    A. Deterministic Frontiers

    Examples of estimating efficiency using a deterministic frontier approach include free disposalhull (FDH), data envelopment analysis (DEA), and corrected ordinary least squares (COLS). The latter(COLS) is a parametric approach in that the frontier is defined using a specified functional form.

    The former two (FDH and DEA) are nonparametric in that there is no specific functional form thatis imposed on the data. Figure 3 plots estimates of the frontier in the health and education sectorsusing FDH analysis. As can be seen, FDH derives the frontier using piecewise linear segments. Bydefinition, all points on the frontier have maximumefficiency (i.e., efficiency values of 1). Inefficienciesare calculated by estimating the vertical distance of each point from the FDH frontier.

    VIE

    MALMLD

    .02 .04 .06 .08 .1

    FIJ

    2 4 6 8

    Education Sector FrontierFree Disposal Hull

    Health Sector FrontierFree Disposal Hull

    Netprimaryerollmentratio

    (Proxyforoutput)

    20

    40

    60

    80

    100

    1000minusunder-fivemortalityrate

    (Proxyforoutput)

    1000

    900

    800

    700

    Teacher-pupil ratio, primary(Proxy for input)

    Source: World Development Indicators (2004)

    Health expenditure per capita, PPP log scale(Proxy for input)

    Source: WHOStatistical Information System(2004)

    FIJ

    KOR

    TON

    SAMINOPRCTAJ MALVIE

    BANCAM

    PHIMON

    KAZ

    AZEKGZMYAIND LAO

    PNG

    NEP

    PAK

    SIN

    KORNRUPLW

    SRI TONSAM

    RMIMLD

    UZB

    INOVAN

    PRCKAZTHA

    PHI

    KGZ TKMFSM

    SOLKIRMON

    TAJ

    AZEBAN

    PNGPAK

    NEPBHU

    INDMYA

    CAMLAO

    AFG

    FIGURE3

    EDUCATIONANDHEALTHSECTORFRONTIERS: FREEDISPOSALHULL (FDH) METHOD

    FIGURE 3EDUCATION ANDHEALTH SECTOR FRONTIERS: FREE DISPOSAL HULL (FDH) METHOD

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    For the education sector, FDH frontier analysis suggests that countries such as Azerbaijan (AZE),Kazakhstan (KAZ), Kyrgyz Republic (KGZ), Lao PDR (LAO), Pakistan (PAK), Papua New Guinea (PNG),and Nepal (NPL)are relatively far from the frontier, i.e., they are relatively inefficient in that theirattainment of primary enrollment ratios after controlling for input levels is low. In contrast, countries

    such as Bangladesh (BAN), Cambodia (CAM), Republic of Korea (KOR), and Philippines (PHI) arepractically on the frontier indicating very high efficiency levels in the education sector. For the healthsector, FDH analysis suggests that Afghanistan (AFG), Lao PDR (LAO), Pakistan (PAK), Papua NewGuinea (PNG), and Tuvalu (TUV) are relatively far from the frontier and, hence, relatively inefficientin attaining lower under-five mortality rates. In contrast, for their resource levels, Malaysia (MAL),Myanmar (MYA), Sri Lanka (SRI), and Tajikistan (TAJ ) have relatively efficient health systems.

    The same data can be analyzed using DEA methods (Figure 4). The DEA is also nonparametricand uses the least number of linear segments to envelop the data: it constructs an upper convexhull on the data. Because it does not wrap the data as tightly as FDH, DEA methods can yield somewhatdifferent conclusions regarding efficiency estimates: e.g., Philippines as per DEA analysis has a lowerestimate of education efficiency vis--vis that obtained using FDH analysis.

    The COLS analysis (not shown) is another deterministic method but uses a parametric regressionto fit the data and then move the regression line up by the largest positive residual to ensure thatall the data lie below it. Deterministic methods, although more transparent, are usually not a goodway to estimate technical efficiency given that they leave no roomfor measurement error. In particular,the methods can be very sensitive to outlying observations.

    PHI

    INO

    .02 .04 .06 .08 .1

    Teacher-pupil ratio, primary(Proxy for input)

    Source: World Development Indicators (2004)

    Netprimaryerollmentratio

    (Proxyforoutput)

    20

    40

    60

    80

    100

    NEPPAK

    PNG

    LAO KGZMYAIND

    CAMKAZ

    PRCMON

    BAN

    PHIVIEKORFIJ

    AZE

    MALTAJTON

    MLD

    SAM

    1000minusunder-fivemortalityrate

    (Proxyforoutput)

    1000

    900

    800

    700

    2 4 6 8

    Health expenditure per capita, PPP log scale(Proxy for input)

    Source: WHO Statistical Information System(2004)

    Health Sector FrontierData Envelopment Analysis

    Education Sector FrontierData Envelopment Analysis

    TAJAZE

    BAN

    MYA PAKBHUNEPIND PNG

    KIRSOLMON

    KGZ FSMINO

    UZBVAN

    TKMMLD

    RMI

    MALSRI

    VIE PRCKAZTHAFIJSAM

    TON PLWNRUKORSIN

    CAMLAO

    AFG

    FIGURE4

    EDUCATIONANDHEALTHSECTORFRONTIERS: DATAENVELOPMENTANALYSIS(DEA) METHOD

    FIGURE4EDUCATION ANDHEALTH SECTOR FRONTIERS: DATA ENVELOPMENTANALYSIS (DEA) METHOD

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    7ERD WORKINGPAPERSERIESNO. 66

    B. Stochastic Frontiers

    Stochastic frontier models allow for random errors in the estimation process. The simplestformulation of a stochastic frontier model is a basic regression model with error decomposition: part

    of the error term is assumed to represent efficiency and is assumed to follow a one-sided distributionsuch as the exponential or truncated normal. Figure 5 plots the stochastic frontier using an exponentialdistribution for efficiency. Some data points in the stochastic method can be higher than the frontier(e.g., Sri Lanka [LKA] and Tajikistan [TJK] for health) if the random noise portion of the error termis large enough.5

    KOR TON

    VAN

    TKM

    NEP

    INO

    Health Sector FrontierStochastic Frontier Model

    Education Sector FrontierStochastic Frontier Model

    Teacher-pupil ratio, primary(Proxy for input)

    Source: World Development Indicators (2004)

    Netprimaryerollmentratio

    (Proxyforoutput)

    20

    40

    60

    80

    100

    .02 .04 .06 .08 .1

    FIJ

    VIEPHI

    MON

    CAM

    BAN

    LAO KGZMYAIND

    MALTAJMLD

    KAZ

    PRC

    AZE

    SAM

    NEPPAK

    PNG

    CAMLAO

    AFG

    TAJAZE

    BAN

    MYABHU

    IND PNG

    KIR

    KGZ

    SOLMON

    INO

    UZB

    SRI

    FSMMLD

    PLWNRUKORSIN

    RMI

    MAL

    THASAMFIJKAZ

    PHIVIETON

    1000

    minusunder-fivemortalityrate

    (Proxyforoutput)

    1000

    900

    800

    700

    2 4 6 8

    Health expenditure per capita, PPP log scale(Proxy for input)

    Source: World Development Indicators (2004)

    FIGURE5

    EDUCATION ANDHEALTH SECTORFRONTIERS: STOCHASTICFRONTIERMETHOD

    FIGURE5EDUCATION ANDHEALTHSECTORFRONTIERS: STOCHASTICFRONTIERMETHOD

    5 In addition, as shown in Figure 5, the estimates of the education sector frontier using the stochastic frontier approachindicate that regularity conditions for a production function are violated: there are negative returns after a certain levelof resource inputs.

    SECTIONII

    EMPIRICSOFEFFICIENCYMEASUREMENT

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    If panel data are available, then stochastic error decomposition methods can be appliedusing a fixed-effect model. The country with the highest fixed effect is assumed to be the mostefficient and the difference between this and each of the other country units is an estimate ofthe inefficiency. Such panel data methods are often the most robust for measurement of efficiency

    for several reasons: (i) multiple observations per unit over time usually contain more informationand hence make it easier to tease out true efficiency effects in the error term from random noise;(ii) they do not require any distributional assumptions on the efficiency component of the errorterm; and (iii) they do not require the assumption that the efficiency component be uncorrelatedwith inputs.

    C. Measuring Efficiency: A Simple Framework

    As the above discussion has shown, efficiency in MDG outcome attainment can be measuredusing frontier production function analysis. Empirically, there are several different ways that the frontiercan be estimated from the data. These include deterministic methods such as FDH and DEA as wellas stochastic methods such as error-decomposition models. As can be seen from Figures 3 to 5, theestimated efficiency can be different depending on the type of method chosen to estimate it, andhence the absolute values are not comparable across the different methods. Stochastic methods appearto be truer to the data-generating mechanismbut require technically complex assumptions regardingdistributions and error mixtures. Furthermore, some argue that the theoretical assumptions underlyingefficiency measurement using such methods are unlikely to hold true in the social sector (Ravallion2003).

    In this subsection, we outline a simpler visual approach to assessing efficiency. This approachdoes not require econometric assumptions regarding functional form or distributions on the errorterm. I t assesses distance from the best performers after roughly controlling for input levels. Inputlevels are broken into quintiles and then the distribution withineach quintile of input allows us toassess which countries are at the top end of the distribution (and which ones are at the bottom:the worst performers). Figure 6 plots the distributions of outcomes by input quintiles for the educationand health sectors. Within each input quintile, Table 1 reports the top three and bottomthree countriesin terms of efficiency. These represent countries that, for their input resource levels are the top andbottom performers, respectively, in terms of MDG outcome attainment in the social sectors. Thereare already some interesting patterns that can be observed: African counties are most likely tobe poor performers in both the education and health sectors, even after controlling for inputs.Civil strife appears to be a risk factor for low health outcomes (e.g., Afghanistan and Sierra Leone).Countries that are efficient in education attainment need not be efficient in health attainment(e.g., Azerbaijan and Cambodia). These observations prompt the need for further investigationas to the determinants of efficiency. For instance, we find that the probability of being efficientwithin a resource group increases with the ability of countries to control corruption, the effect

    being higher in the health sector vis--vis the education sector (Figure 7).

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    9ERD WORKINGPAPERSERIESNO. 66

    TABLE 2EDUCATIONANDHEALTHSECTOROUTCOMES: HIGHVERSUSLOWEFFICIENCYCOUNTRIES

    (ASIAN DMCSHIGHLIGHTED)

    INPUTEDUCATION SECTOR OUTCOMES HEALTH SECTOR OUTCOMES

    QUINTILE HIGH EFFICIENCY LOWEFFICIENCY HIGH EFFICIENCY LOWEFFICIENCY

    1 Bangladesh (BAN) Eritrea (ERI) Tajikistan (TAJ) Niger (NGR)Equatorial Guinea Burkina Faso (BUF) Azerbaijan (AZE) Afghanistan (AFG)(EQG) Niger (NGR) Comoros (COM) Sierra Leone (SIE)Cambodia (CAM)

    2 Korea (KOR) Ghana (GHA) Sri Lanka (SRI) Central AfricanJ amaica (JAM) Tanzania (TNZ) Georgia (GEO) Republic (CAR)Dominican Republic Djibouti (DJ I) Moldova (MOL) Liberia (LIB)(DOR) Angola (ANG)

    3 Peru (PER) Namibia (NAM) Cuba (CUB) Zimbabwe (ZIM)

    Fiji (FIJ) Swaziland (SWA) J amaica (JAM) Cambodia (CAM)Mexico (MEX) Kenya (KEN) Libya (LBY) Swaziland (SWA)

    4 Argentina (ARG) Oman (OMA) Malaysia (MAL) Maldives (MLD)Ecuador (ECU) Serbia & Montenegro Belarus (BLR) Namibia (NAM)Tonga (TON) (YUG) Dominica (DOM) Botswana (BOT)

    Ukraine (UKR)

    5 Barbados (BAR) Armenia (ARM) Singapore (SIN) Tuvalu (TUV)Seychelles (SEY) Azerbaijan (AZE) Czech Republic (CZR) South Africa (SOA)Malta (MLT) Saudi Arabia (SAU) Malta (MLT) Brazil (BRA)

    Health Outcomes by Input QuintilesEducation Outcomes by Input Quintiles

    1000mln

    nunder-fivemortalityrate

    1,000

    Netp

    rimaryenrollmentratio

    900

    800

    700

    100

    80

    60

    40

    20

    1 2 3 4 5 1 2 3 4 5

    FIGURE6

    EDUCATIONANDHEALTHSECTORS: OUTCOMESBYINPUTQUINTILES

    FIGURE6EDUCATIONANDHEALTH SECTORS: OUTCOMESBY INPUTQUINTILES

    Input quintilesInput quintiles

    SECTION I II

    EMPIRICSOFEFFICIENCYMEASUREMENT

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    III. EFFICIENCY OF THE HEALTH SYSTEM IN INDONESIA:A SUBNATIONAL APPLICATION

    Arguably, the greatest utility of doing a sectoral efficiency analysis is withincountries and notacrosscountries, the latter often being dismissed by some as being of relevance only for internationalorganizations and donor countries (Haines and Cassels 2004). For policymakers, the most usefulinformation content of a macro system efficiency analysis could come from being able to identifyregions or districts within countries that are outperforming others despite resource constraints.Information on efficient subnational regions can be useful for many reasons. First, as a stock-takingexercise, it can help shed light on the extent to which variations in education or health outcomesexist within countries. Second, as mentioned earlier, once such regions or districts are identified,such an analysis can help highlight what factors might be responsible for differences in outcomeattainment, and to what extent these are related to resource deficiencies. An oft-cited example isthe state of India in Kerala that has stellar education and health outcomes despite having a fairlylow income per capita. Good governance, political will, and lower levels of income inequality are

    often cited as reasons explaining Keralas efficiency with regard to outcome attainment in the socialsector.

    1 2-2 -1 0 3

    Control of corruption index

    1 2-2 -1 0 3

    Control of corruption index

    0

    .2

    .4

    .6

    .8

    1

    0

    .2

    .4

    .6

    Efficiency vs. Corruption Education Sector Efficiency vs. Corruption Health Sector

    Probabilityofbeingefficient

    Probabilityofbeingefficient

    1

    .8

    FIGURE7

    EDUCATIONANDHEALTHSECTORS: EFFICIENCYVERSUSCORRUPTION

    FIGURE 7EDUCATION ANDHEALTH SECTORS: EFFICIENCY VERSUS CORRUPTION

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    11ERD WORKINGPAPERSERIESNO. 66

    This section reports on the results obtained from an exercise done for measuring health systemefficiency at the district (kabupatam) level in Indonesia.6 The potential relevance of such an analysisfor policymakers is especially apparent given the recent implementation of decentralization in Indonesia.Instead of using a proxy for resource inputs, the Indonesia subnational application used a more general

    conceptualization of factors influencing outcomes: these factors were taken to be an index of district-level constraintsto attainment of district-level health systemoutcomes. The approach follows a frameworkdeveloped by Hanson et al. (2003). In the empirical application of their approach, they categorizeconstraints in terms of the level at which they operate and the degree to which the effect of theconstraint can be overcome by additional resources (Ranson et al. 2003). Hanson et al. considerconstraints at three broad levels: (i) community/household; (ii) health service delivery; and (iii)overall environment. Under community/household constraints they look at factors such as femaleeducation (which influences demand for health). For health service delivery, they consider indicatorssuch as vaccination coverage (DPT3), number of nurses per 100,000 population, and health infrastructure(proportion of population living within one hour of health facility). For overall environment, theyconsider a corruption control index, a government effectiveness index, and GDP per capita. They createan overall index: an unweighted average of all three levels of constraint indicators measuring the

    degree to which it is likely to be difficult for countries to scale up access to health interventions.Although useful, their frameworkby mixing both input indicators (such as nurses per capita) withoutcome indicators (such as immunization coverage) and with exogenous determinants (such asgovernance)potentially dilutes the recovery of critical information content regarding the efficiencyof health systems.

    In the application to the district level in Indonesia, we follow a modification of the Hansonet al. (2003) approach. We create an outcome index (composed of a weighted average of completeimmunization coverage, skilled birth attendance, iodized salt content, catastrophic expenditure, andlife expectancy); and an input index (a weighted average of estimated permanent income, femaleeducation, nurses per 100,000, out-of-pocket health expenditure, and access to health facilities).7

    The output index consists of health system outcomes including an index measuring the extent to

    which the population is protected from impoverishment (catastrophic expenditure). The frameworkadapts the one used by the World Health Organization in its country-level efficiency analysis (WHO2000). Figure 8 plots the outcome index versus the input index for 300+ kabupatamsin Indonesiafor which data were available, along with a DEA frontier (some of the districts on or near the frontierare labeled). Figure 9 plots the same data using the simpler approach elaborated in the previoussection. As the figures suggest, there are wide variations in district-level health system performance.Resource and environmental constraints are only part of the explanation: other factors such as district-level governance and epidemiological background may need to be studied for further determinantsof efficiency analysis. This analysis is part of ongoing research.

    6 The results of this are forthcoming in a report being prepared by the World Health Organization and the IndonesianNational I nstitute of Health Research and Development.

    7 The weights were derived using confirmatory factor analysis assuming one outcome factor and one input factor. However,the analysis is not sensitive to choice of weights and factors: similar results were obtained using an unweighted index.

    SECTIONII I

    EFFICIENCYOFTHEHEALTHSYSTEMININDONESIA: A SUBNATIONALAPPLICATION

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    -4

    -2

    Outputindex

    6420-4 -2

    Input index

    Indonesia District-level Efficiency Analysis

    4

    2

    0

    Jayawi Jaya (Papua)

    Manokwari (Papua)

    Soppeng (Sulawesi Selatan)

    Kulon Progo(DI Yogyakarata)

    Blitar (J awa Timur)Madiun (Jawa Timur)

    FIGURE8

    INDONESIANDISTRICT-LEVEL HEALTHSYSTEMEFFICIENCYANALYSIS--I

    FIGURE8INDONESIANDSTRICT-LEVEL HEALTHSYSTEMEFFICIENCYANALYSIS--I

    -4

    -2

    2

    0

    Distributionofoutputindex

    4

    Deciles of Input I ndex

    1 2 3 4 5 6 7 8 9 10

    FIGURE9

    INDONESIANDISTRICT-LEVEL HEALTHSYSTEMEFFICIENCYANALYSIS--II

    FIGURE 9INDONESIAN DISTRICT-LEVEL HEALTH SYSTEMEFFICIENCYANALYSIS--II

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    13ERD WORKINGPAPERSERIESNO. 66

    IV. CONCLUSIONS

    Almost all countries in the world have signed on their commitment to attainment of MDGoutcomes.At least part of the effort toward attaining MDGs in the social sector has to come from additional

    resource outlays to these sectors. However, improvements in efficiency at existing resource levelsor those combined with additional resource outlaysprovide one more mechanismby which progresscan be made. Frontier production analysis provides one simple framework within which to examinethese efficiency-related issues at the macro system level such as at the level of the health sectoror the education sector.

    This paper gives an overview of the application of frontier methods to attain two MDG indicators:net primary enrollment for education and under-five mortality rates for health. We compare theattainment of these MDG outcomes relative to the resource inputs currently available to these sectors.For illustrative purposes, we consider the teacher-pupil ratio as an indicator of the resource inputsto the education sector, and we take health expenditure per capita as a proxy for resources availableto the health sector. Although the proxies may be crude, they are used more for expository purposes.We show how the health and education sectors can be viewed as production units and apply differentways of estimating the frontier to the data. We show how the choice of method can yield very differentestimates of efficiency. In addition, the complexity of the econometric methods used may not betransparent and the assumptions required too heroic for the data at hand. A simpler approach is tosimply derive efficiencies by looking at the distribution of the outcome within different bins of theinput index. This method is transparent and easy to explain to nonspecialists (including policymakers)and does not require detailed assumptions regarding the distribution of efficiency. It also easily allowsus to assess exogenous (environmental) factors that influence efficiency such as governance andcontrol of corruption, yielding insights into what policy-related or other factors may be constrainingMDG attainment in the social sectors.

    We demonstrate the application of the simpler method to assess kabupatamefficiency in attaininghealth system outcomes in Indonesia. Further research needs to be done in order to assess why isit that some regions are doing better than others. However, knowledge of knowing who are the bestperformers is critical to understanding policy options that may allow for improvements in outcomeswithoutor in addition toadditional resource outlays.

    SECTIONIV

    CONCLUSIONS

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    N o. 35 B o n d M a r k et D e ve lop m en t in E a s t As ia :

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    Issues and Chal l enges

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    N o. 3 6 E n v ir on m en t S t a t i s t ics i n C en t r a l As ia : P r o gr e ss

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    N o. 4 2 E c on om ic G r ow t h a n d P o v er t y R ed u ct i on

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    N o. 43 Wh y H a s In com e In e q ua l it y i n Th a i la n d

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    N o. 4 6 Loca l G o v er n m en t F i n a n ce , P r i va t e R e sou r ce s,

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    N o. 4 7 E x ce ss In v es t m en t a n d E f f ici en cy Lo ss D u r in gReforms: The C as e of P rovincial-level Fixed-Asset

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    Financing in AsiaSome Research Issues

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    Thomas H ert el an d Fan Zhai , November 2004

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    Evidence from Cross-Country Da ta

    Abuzar Asra, Gemma E strada, Yangseom Ki m,

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    No. 66 Measur ing Eff ici ency o f Macro Systems: An

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    Ajay Tan don, Mar ch 2005

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    N o. 8 Te st in g S a vi ng s P r od uct I n n ov a t ion s U s in g a n

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    Nava A shraf, Dean S. Karl an, and Wesley Yin,

    N ovember 2003

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    and Pract ice at the Asian Development Bank

    Dav id Dol e, December 2003

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    Financial , E conomic, a nd Social G oals

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    Arvi nd Pana gariya, N ovember 2001

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    J une 2002

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    Davi d D ole and Pi ya Abeygunawar dena,

    September 2002

    N o. 6 E c on om ic An a l y si s of H ea l t h P r oje ct s : A C a s e S t u dy

    in Ca mbodia

    Er ik Bl oom and Peter Choynowski, M ay 2003

    No. 11 Impli ca t ions o f a U S Doll ar Depreci a t i on for Asi an

    Developing Countries

    Emm a Fan, Jul y 2002

    N o. 1 2 D a n ger s of D efla t ion

    D. Brooks and Pil ipi nas Quising, Decemb er 2002

    N o. 1 3 In f ra s t r u ct u r e a n d P ov er t y Re du ct i on

    What is the Connection?

    Ifzal Al i and E rn esto Pern ia, Jan uar y 2003N o. 1 4 In f ra s t r u ct u r e a n d P ov er t y Re du ct i on

    Making Markets Work for the Poor

    Xian bin Yao, May 2003

    N o. 1 5 S AR S : E con om ic Im pa c t s a n d Im p li ca t i on s

    Emm a Xiaoqin Fan, M ay 2003

    No. 16 Emerging Tax Issues: Impli ca t ions of G loba l iza t i on

    and Technology

    Kanokpan L ao Araya, May 2003

    N o. 17 P r o -P o or G r ow t h : Wh a t i s I t a n d Wh y is I t

    Impor t ant?

    Er nesto M . Pern ia, M ay 2003

    N o. 1 8 P u b li c P r iv a t e P a r t n e r s h ip f or C o m pe t it i ve n es s

    Jesus Felip e, J un e 2003

    No. 19 Reviving Asi an Economic Growth Requi res Fur ther

    Reforms

    Ifzal A li , Jun e 2003

    No. 20 The Mi ll ennium Development Goal s and Pover ty :Are We Count ing t he Worlds Poor Right ?

    M. G. Qui br ia, J uly 2003

    N o. 2 1 Tr a d e a n d P o ve r t y: Wh a t a r e t h e C on n ect i on s ?

    Douglas H . Brooks, Ju ly 2003

    N o. 2 2 Ad a p t in g E d u ca t i on t o t h e G l ob a l E con om y

    Oli vier Du pri ez, September 2003

    No. 23 Avian F lu : An Economic Assessment fo r Selected

    Developing Countries in Asia

    Jean-Pierr e Verbiest and Char issa Casti ll o,

    M arch 2004

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    N o. 25 P u r ch a s i ng P ow e r P a r it i es a n d t h e In t e rn a t i on a l

    Comparison Program in a Global ized World

    Bi shnu Pant, Mar ch 2004

    No. 26 A Note on Dual/Mul t ip le Exchange Rates

    Emm a Xiaoqin Fan, M ay 2004

    No. 27 Inc lus ive Growth for Sust a inable Pover ty Reduct ion

    in Developing Asia: The Enabling Role of

    Infra structure Development

    I fzal Al i and Xianbi n Yao, M ay 2004

    N o. 2 8 H i g he r O il P r i ce s: As ia n P e r sp ect i ve s a n d

    Implications for 2004-2005

    Cyn-Young Park, J un e 2004No. 29 Accelera t ing Agr i cul ture and Rura l Development fo r

    Inclusive Growth: Policy Implications for

    Developing Asia

    Richard B olt , Jul y 2004

    N o. 3 0 Li vi n g w it h H i gh e r In t er es t R a t e s: I s As ia R e a d y ?

    Cyn-Young Park , August 2004

    No. 31 Reserve Accumula t ion , S ter i li za t i on , and Po li cy

    Dilemma

    Aki ko Terad a-Hagi war a, October 2004

    3 2 Th e P r im acy of Refor ms in t he Em er gen ce of

    Peoples Republic of China and India

    I fzal Al i and Em ma Xiaoqin Fan, N ovember

    2004

    3 3 P opu la t ion H ea lt h a nd F or eig n Dir ect I nves tm en t:

    Does Poor Heal th Signal Poor Government

    Effectiveness?

    Ajay Tandon, Januar y 20053 4 F in a ncin g I nfr a st ru ct ur e Developm en t: Asia n

    Developing Countries Need to Tap Bond Markets

    More Rigorously

    Yun-Hw an Ki m, February 2005

    1. Improv ing Domest ic Resource Mobi li za t i on ThroughFinancial Development: Overview September 198 5

    2. Improv ing Domest ic Resource Mobi li za t i on Through

    Financial Development : Bangladesh Ju ly 1986

    3. Improv ing Domest ic Resource Mobi li za t i on Through

    Financial Development : Sri Lanka Apr i l 1987

    4. Improv ing Domest ic Resource Mobi li za t i on Through

    Financial Development : India December 1987

    5. F inanc ing Publi c Sector Development Expenditure

    in Selected Countries: Overview Janu ary 1988

    6. S tudy of Selected Indust r i es : A Br ie f Repor t

    Apr i l 1988

    7. F inanc ing Publi c Sector Development Expenditure

    in Selected Countries: Bangladesh J une 1988

    8. F inanc ing Publi c Sector Development Expenditure

    in S elected Countries: India Ju ne 1988

    9. F inanc ing Publi c Sector Development Expenditure

    in Selected Countries: Indonesia Ju ne 198810. F inanc ing Publ ic Sector Development Expendi ture

    in Selected Countries: Nepal Ju ne 1988

    11. F inanc ing Publ ic Sector Development Expendi ture

    in Selected Countries: Pakistan J une 1988

    12. F inanc ing Publ ic Sector Development Expendi ture

    in Selected Countries: Philippines Ju ne 1988

    13. F inanc ing Publ ic Sector Development Expendi ture

    in Selected Countries: Thailand Ju ne 1988

    14. Towards Regiona l C oopera t ion in South Asi a :

    ADB/EWC Sy mposium on Regiona l Cooperation

    in South Asia February 1988

    15. Evalua t ing R ice Market In tervent ion P o li ci es :

    Some Asian Exa mples Apr i l 1988

    16. Improving Domest ic Resource Mobi lizat ion Through

    Financial Development : Nepal November 1988

    17. Foreign Trade Barr i ers and Expor t Growth September

    1988

    18. The Role of Sma l l and Medium-Scale Industries in theIndustria l Development of th e P hi l ippines Apr i l 1989

    19. The Role of Sma l l and Medium-Scale Manufa cturing

    Industries in Industrial Development: The Experience of

    Selected Asian Countries Januar y 1990

    20. Nat ional Accounts of Vanuat u, 1983-1987 January

    1990

    21. Nat ional Accounts of Western Sa moa, 1984-1986

    Februar y 1990

    22. Huma n Resource Pol icy and Economic Development :

    Selected C ountry S tudies Jul y 1990

    23. Expor t F inance: Some Asi an Examples September 1990

    24. Nat iona l Accounts of the Cook Islan ds, 1982-1986

    September 1990

    25. Framework for the E conomic and F inanc ia l Appra i sa l o f

    Urba n D evelopment Sector P rojects Januar y 1994

    26. Framework and Cr i t er ia for the Appra i sa l and

    Socioeconomic J ustificat ion of Educat ion Pr ojectsJanuar y 1994

    2 7 . In v es t in g in As ia 1997 (Co-publi shed wi th OECD )

    28. The Future of Asia in the World Economy 1998 (Co-

    publ ished wi th OECD)

    29. F inanc ia l Libera l isa t i on in Asi a : Analys i s and P rospec t s

    1999 (Co-publi shed wi th OECD )

    30. Sust a inable Recovery in Asia : Mobi li z ing Resources for

    Development 2000 (Co-publi shed w ith OECD)

    31. Technology and Poverty Reduct ion in Asia an d the Pa cif ic

    2001 (Co-publi shed wi th OE CD)

    3 2. As ia a n d E u rop e 2002 (Co-publi shed wi th OE CD)

    33. Economic Analysis: Retrospect ive 2003

    34. Economic Analysis: Retrospect ive: 2003 Updat e 2004

    35. Development Indicators Reference Manual : Concepts and

    Definitions 2004

    SPECIAL STUDIES, COMPLIMENTARY

    (Available through ADB Office of External Relations)

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    OLD MONOGRAPH SERIES

    (Available through ADB Office of External Relations; Free of charge)

    EDRC REPORT SERIES (ER)

    N o. 1 AS E AN a n d t h e As ia n D ev el op me nt B a n k

    Seij i Naya, Apr i l 1982

    N o. 2 D e ve lop m en t I s su es for t h e D e ve lop in g E a s t

    and Southeast Asian Countries

    and Internat ional Cooperat ion

    Seij i Naya and Gr aham Abbott , Apr i l 1982

    N o. 3 Aid , S a vin g s, a n d G r ow t h in t h e As ia n R eg ion

    J. M alcolm Dowling and U lr i ch H iemenz,

    Apr i l 1982

    N o. 4 D e ve lop m en t -or ie n t ed F or ei gn In ve st m en t

    and the Role of ADB

    Kiyoshi K oj ima, Apr i l 1982

    N o. 5 Th e M ul ti la t e ra l D ev elop me nt B a n k s

    and the Internat ional Economys Missing

    Public Sector

    John L ewi s, Ju ne 1982

    N o. 6 N ot es on E xt er na l D eb t of DM Cs

    Evelyn Go, Ju ly 1982

    N o. 7 G r an t E lem en t in B a n k L oa n s

    Dal H yun K im, Ju ly 1982

    N o. 8 S h a dow E xch a ng e R a tes a n d S t a nd a rd

    Conversion Fa ctors in Pr oject E valuat ion

    Peter War r, September 1982

    N o. 9 S m a ll a n d Med iu m-S ca l e M a n uf a ct u rin g

    Esta bl ishments in ASEAN Countries:

    Perspect ives and Pol icy Issues

    Mathi as Bruch and U lr i ch H iemenz, January

    1983

    No. 10 A Note on the Thi rd Mini s ter i a l Meet ing of GATT

    Ju ngsoo Lee, J anuar y 1983

    No. 11 Macroeconomic Forecas t s for the Republ ic

    of China, Hong Kong, and Republic of Korea

    J.M . Dowli ng, Janu ary 1983

    N o. 1 2 AS E AN : E con om ic S it u a t i on a n d P r o sp ect s

    Seij i Naya, M arch 1983

    No. 13 The Future Prospec t s for the Developing

    Countries of Asia

    Seij i Naya, M arch 1983

    N o. 1 4 E n e r gy a n d S t ru ct u r a l C h a n g e i n t h e As ia -

    Pacific Region, Summary of the Thirteenth

    Pacific Trade and Development Conference

    Seij i Naya, M arch 1983

    N o. 1 5 A S u r ve y of E m pi ri ca l S t u di es on D e m a n d

    for Electric ity wi th Special E mphasis on P rice

    Elast ic i ty of Demand

    Wisarn Pupphavesa, Ju ne 1983

    N o. 16 D e t er m in a n t s of P a d d y P r o du ct i on i n In don e si a :

    1972-1981A Simultaneous Equation Model

    Approach

    T.K. Jayaram an, Jun e 1983

    No. 17 The Phi l ippine Economy: E conomic

    Forecasts for 1983 and 1984

    J.M . Dowling, E. Go, and C.N. Cast i l lo, June

    1983

    N o. 1 8 E c on om i c F or e ca s t f or In d on e si a

    J.M . Dowlin g, H.Y. Kim , Y.K. Wang,

    and C.N . Castil lo, June 1983

    N o. 1 9 R el a t iv e E xt e rn a l D e bt S i t u a t ion o f As ia n

    Developing Countr ies: An Application

    of Ranking Method

    J un gsoo Lee, Ju ne 1983

    No. 20 New Ev idence on Yields , Fer t i li zer Appl ic a t ion ,

    and Prices in Asian Rice Production

    Wil li am J ames and Teresita Rami rez, Jul y 1983

    N o. 2 1 In f la t i on a r y E ff ect s of E xch a n g e R a t e

    Changes in Nine Asian LDCs

    Pradumn a B. Rana and J. Mal colm Dowlin g, Jr . ,

    December 1983

    N o. 2 2 E f f ect s of E x t er n a l S h ock s on t h e B a l a n ce

    of Payments, Pol icy Responses, and Debt

    Problems of Asian Developing Countries

    Seij i N aya, December 1983

    N o. 23 C h a n g i ng Tr a d e P a t t e rn s a n d P o li cy I s su es :

    The Prospects for East and Southeast Asian

    Developing Countries

    Seij i Naya and Ul r i ch Hi emenz, February 1984

    No. 24 Smal l -Sca le Indust r ies in Asi an Economic

    Development : Problems and Prospects

    Seij i N aya, Februar y 1984

    N o. 2 5 A S t u d y on t h e E x t er n a l D e bt In d ica t o r s

    Applying Logit Ana lysis

    Ju ngsoo Lee and Cl ari ta Bar retto, Febru ary 1984

    N o. 2 6 Al t er n a t i ve s t o In s t it u t ion a l C r e di t P r og r a m s

    in t he Agricultura l Sector of Low-Income

    Countries

    Jennifer Sour, Mar ch 1984

    No. 27 Economic Scene in Asi a and I t s Speci a l Fea tures

    Kedar N . Kohli , November 1984

    No. 28 The Ef fec t of Terms of Trade Changes on the

    Bal ance o f Payments and Real Nat iona l

    Income of Asian Developing Countries

    Ju ngsoo L ee and L utgar da L abios, J anuar y 1985

    N o. 2 9 C a u s e a n d E f fe ct i n t he Wor l d S u g a r M a r ke t :

    Some Empirical Findings 1951-1982

    Yoshi hi ro Iwasaki , Febru ary 1985

    N o. 3 0 S ou r ce s of B a l a n ce of P a y m e nt s P r ob le m

    in the 1970s: The Asian Experience

    Pradum na Rana, Februar y 1985

    N o. 3 1 In d ia s Ma n u f a ct u r ed E x p or t s : An An a l y si s

    of Supply Sectors

    I fzal Al i , Februar y 1985

    N o. 3 2 M ee t in g B a s i c H u m a n N ee ds in As ia n

    Developing Countries

    Ju ngsoo L ee and Em ma Ban ari a, Mar ch 1985

    N o. 3 3 Th e Im pa c t of F or e ig n C a p it a l In fl ow

    on Investment and Economic Growth

    in Developing Asia

    Evelyn Go, May 1985

    No. 34 The Cl imate fo r Energy Development

    in the Pa cif ic and Asian Region:

    Priori t ies and Perspect ives

    V.V. Desai, Apr il 1986

    No. 35 Impac t o f Appreci a t i on of the Yen on

    Developing Member Countries of the B ank

    Ju ngsoo Lee, Prad um na Rana, and Ifzal Al i,

    M ay 1986

    No. 36 Smuggling and Domest i c Economic Po l ic ies

    in Developing Countries

    A.H.M .N. Chowdhu ry, October 1986

    N o. 3 7 P u b li c In v es t m en t C r i t er i a : E con om i c In t er n a l

    Rate of Return and Equal izing Discount Rate

    If zal Ali , November 1986

    No. 38 Review o f the Theory o f Neoc lass i ca l Po l it i ca l

    Economy: An Application to Trade Policies

    M .G. Quibr ia, D ecember 1986

    No. 39 Fac tors In f luencing the Choice of Loca t ion :

    Local and Foreign Firms in the Phi l ippines

    E.M. Perni a and A.N. H err in, Februar y 1987

    No. 40 A Demographic Perspec t ive on Developing

    Asia and Its Relevance to the Bank

    E.M . Pern ia, M ay 1987

    N o. 4 1 E m e r gi n g I s s ue s in As ia a n d S o ci a l C os t

    Benefi t Analysis

    I. A li , September 1988

    N o. 4 2 S h i ft i ng R ev ea l ed C om pa r a t i v e Ad v a n t a g e:

    Experiences of Asian an d P acific Developing

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    N o. 1 I nt er na t ion a l R es er ves :

    Factors Determining Needs and Adequacy

    Evelyn Go, May 1981

    N o. 2 D om es t ic S a v i ng s i n S e le ct e d D e ve lop in g

    Asian Countries

    Basil M oore, assisted by A.H.M . Nur uddi n

    Chowdh ur y, September 1981

    N o. 3 C h a n g es i n C o ns u mp t ion , Im p or t s a n d E x por t s

    of Oil Since 1973: A Preliminary Survey of

    the Developing Member Countries

    of the Asian Development Bank

    Dal H yun Ki m and Gr aham Abbott , September

    1981

    N o. 4 B y -P a s s e d Ar e a s , R eg ion a l In e q ua l it i es ,

    and Development Policies in Selected

    Southeast Asian Countries

    Wil li am J ames, October 1981

    No. 5 Asi an Agr i cul ture and Economic Development

    Wil l iam James, Mar ch 1982

    N o. 6 In f la t i on in D ev el op in g Me mb er C ou n t r ie s:

    An Analysis of Recent Trends

    A.H.M. Nurudd in Chowdhuryan dJ. M alcolm

    Dowl ing ,M arch 1982

    N o. 7 I n du st r ia l G r ow t h a n d E m ploy m en t i n

    Developing Asian Countries: Issues a nd

    P erspect ives for th e Coming D ecade

    ECONOMIC STAFF PAPERS (ES)

    Countries

    P.B. Rana, N ovember 1988

    No. 43 Agr i cul tura l Pr i ce Po l icy in Asi a :

    Issues and Areas of Reforms

    I. Al i, N ovember 1988

    No. 44 Serv ice Trade and Asi an Developing Economies

    M .G. Quibr ia, October 1989

    No. 45 A Review o f the Economic Analys i s of Power

    Projects in Asia and Identification of Areas

    of Improvement

    I. Al i, N ovember 1989

    N o. 4 6 G r o w t h P e rs pe ct i ve a n d C h a l le n ge s for As ia :Areas for Pol icy Review a nd Research

    I. Al i, N ovember 1989

    N o. 4 7 An Ap pr oa c h t o E s t i ma t i n g t he P ov er t y

    Alleviation Impact of an Agricultural Project

    I . Al i , January 1990

    N o. 4 8 E c on om ic G r ow t h P e r for m a n ce of In d on e si a ,

    the Phi l ippines, and Thai land:

    The Human Resource Dimension

    E.M. Perni a, Januar y 1990

    N o. 4 9 F or e ig n E x ch a n g e a n d F is ca l Im p a ct o f a P r o je ct :

    A Methodological Framework for Estimation

    I. Ali , Februar y 1990

    N o. 50 P u b li c In v es t m en t C r it e ri a : F i na n c ia l

    and Economic Internal Rates of Return

    I. Al i , Apr i l 1990

    N o. 5 1 E v a l ua t i on o f Wa t e r S u pp ly P r o je ct s :

    An Economic FrameworkArl ene M. Tadl e, Jun e 1990

    N o. 5 2 In t er r el a t ion s h ip B e t w e en S h a d o w P r ice s, P r o je ct

    Investment , and Pol icy Reforms:

    An Analyt ical Fra mework

    I. Al i, N ovember 1990

    No. 53 Issues in Assess ing the Impac t of Pro ject

    and Sector Adjustment Lending

    I . Ali , December 1990

    N o. 54 S om e As pe ct s of U r b a n iz a t i on

    and the Environment in Southeast Asia

    Er nesto M. Pern ia, Jan uar y 1991

    N o. 55 F i na n c ia l S ect or a n d E c on om ic

    Development: A Survey

    J un gsoo L ee, September 1991

    N o. 5 6 A Fr a m e w or k f or J u s t if y in g B a n k -As s is t ed

    Education Projects in Asia: A Review

    of the Socioeconomic Analysis

    and Identification of Areas of Improvement

    Eti enne Van D e Wall e, Februar y 1992

    N o. 5 7 M ed iu m -t e rm G r o w t h -S t a b i li za t i on

    Relationship in Asian Developing Countries

    and Some Pol icy Considerat ions

    Yun-Hw an Ki m, February 1993

    N o. 58 U r b a n i za t i on , P o pu la t i on D i st r i bu t ion ,

    and Economic Development in Asia

    Er nesto M. Perni a, Februar y 1993No. 59 The Need fo r F isca l Consol ida t ion in Nepal :

    The Results of a Simulation

    Fil ippo di Maur o and Ronald Antonio But iong,

    Ju l y 1993

    N o. 6 0 A C om p ut a b le G e n er a l E q u il ib r iu m M od el

    of Nepal

    Ti mothy Buehrer and Fil ippo di M auro, October

    1993

    No. 61 The Role o f Government in Expor t Expansion

    in the Republic of Korea: A Revisit

    Yun-Hw an Ki m, February 1994

    N o. 62 R u r a l R ef or m s, S t r u ct u r a l C h a n g e,

    and Agricul tural G rowth in

    the Peoples Republic of China

    Bo Lin , August 1994

    No. 63 Incent ives and Regula t ion for Po llu t ion Abatement

    with an Application to Waste Water TreatmentSudipto M undl e, U. Shankar, and Shekhar

    M ehta, October 1995

    N o. 6 4 S a v i ng Tr a n s it i on s in S ou t h ea s t As ia

    Frank H arr i gan, February 1996

    N o. 6 5 Tot a l F a c t or P r o du ct i vi t y G r ow t h i n E a s t As ia :

    A Critical Survey

    Jesus Feli pe, September 1997

    N o. 66 F or e ig n D ir e ct In ve st m en t in P a k i st a n :

    Pol icy Issues and Operat ional Implicat ions

    Ashfaque H. Kh an and Yun-Hw an Kim , July

    1999

    N o. 6 7 F i sca l P o li cy , In com e D is t r ib u t ion a n d G r o w t h

    Sai lesh K. Jha , November 1999

    Ul r ich H iemenz, March 1982

    No. 8 Pet rodol lar Recyc ling 1973-1980.

    Part 1: Regional Adjustments and

    the World Economy

    Burn ham Campbel l , Apr i l 1982

    N o. 9 D e ve lop in g As ia : Th e Im por t a n ce

    of Domest ic P olicies

    Economi cs Offi ce Staff u nder th e di recti on of Seij i

    Naya, M ay 1982

    N o. 1 0 F i na n c ia l D e ve lop m en t a n d H o us eh ol d

    Sa vings: Issues in Domest ic Resource

    Mobilization in Asian Developing Countries

    Wan-Soon Kim , Jul y 1982

    No. 11 Indust r i a l Development : Role o f Speci a l ized

    Financial Inst i tut ions

    Kedar N. K ohl i , August 1982

    No. 12 Pet rodol lar Recyc ling 1973-1980.

    Par t I I : Debt Problems and an Eva lua t ion

    of Suggested Remedies

    Bur nham Campbell, September 1982

    N o. 1 3 C r e di t Ra t i on in g , R u r a l S a v i ng s , a n d F in a n ci a l

    Policy in Developing Countries

    Wil li am J ames, September 1982

    N o. 1 4 S m a l l a n d M ed iu m -S ca l e M a n u fa c t ur in g

    Esta bl ishments in ASEAN Countries:

    Perspect ives and Pol icy Issues

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    M athias Bruch and Ul r ich H iemenz, M arch 1983

    N o. 1 5 In com e D i st r i bu t ion a n d E con om i c

    Gr owth in Developing Asian Countries

    J. M alcolm Dowlin g and David Soo, M arch 1983

    No. 16 Long-Run Debt-Servi cing Capac i t y of

    Asian Developing Countr ies: An Application

    of Cri t ical Int erest Ra te Approach

    J un gsoo Lee, Ju ne 1983

    N o. 1 7 E x t er n a l S h ock s, E n er g y P o li cy ,

    and Macroeconomic Performance of Asian

    Developing Countr ies: A P olicy Analysis

    Wil l iam J ames, Jul y 1983N o. 1 8 Th e Im pa c t of t h e C u r r en t E x ch a n g e R a t e

    System on Trade and Inflat ion of Selected

    Developing Member Countries

    Prad um na Rana , September 1983

    No. 19 Asian Agr i cul ture in Transi t i on : Key Po li cy Issues

    Wil li am J ames, September 1983

    N o. 2 0 Th e Tr a n s it i on t o a n In d u st r i a l E con om y

    in Monsoon Asia

    H arr y T. Oshi ma, October 1983

    No. 21 The S igni fi cance of Off-Farm Employment

    and Incomes in Post-War East Asian Growth

    H arry T. Oshima, January 1984

    N o. 2 2 In com e D is t r ib u t ion a n d P o ve rt y i n S e le ct e d

    Asian Countries

    John M alcolm Dowl ing, Jr ., November 1984

    No. 23 ASEAN Economies and ASEAN Economic

    CooperationN arongchai Akr asanee, N ovember 1984

    No. 24 Economic Analys i s of Power Pro ject s

    Ni t in Desai, Januar y 1985

    No. 25 Expor t s and Economic Growth in the Asi an Region

    Pradum na Rana, February 1985

    N o. 26 P a t t e rn s of E x t er n a l F in a n c in g of D M C s

    E. Go, May 1985

    No. 27 Indust r ia l Techno logy Development

    the Republic of Korea

    S.Y. Lo, Ju ly 1985

    N o. 2 8 R is k An a l y si s a n d P r o je ct S e l ect i on :

    A Review of Practical Issues

    J.K . Johnson, August 1985

    N o. 2 9 R ice i n In don e si a : P r i ce P o li cy a n d C o m pa r a t i v e

    Advantage

    I . Al i , Janu ary 1986

    N o. 3 0 E f f ect s of F or e ig n C a p it a l In fl ow son Developing Countries of Asia

    Ju ngsoo Lee, Prad umn a B. Rana, and Yoshi hi ro

    Iw asaki, Apr i l 1986

    No. 31 Economic Analys is of the Env i ronmenta l

    Impacts of Development Projects

    John A. Di xon et al ., EAPI, East-West Center,

    August 1986

    No. 32 Sc ience and Technology for Development :

    Role of the Bank

    Kedar N . Kohl i and Ifzal Al i , N ovember 1986

    N o. 3 3 S a t e ll it e R em ot e S en s in g in t h e As ia n

    and Pacific Region

    M ohan Sundar a Rajan , December 1986

    N o. 34 C h a n g e s i n t h e E x por t P a t t e r n s of As ia n a n d

    Pacific Developing Countries: An Empirical

    Overview

    Pradum na B. Rana, Janu ary 1987No. 35 Agr i cul tura l Pr i ce Po l icy in Nepal

    Geral d C. Nelson, M arch 1987

    N o. 3 6 Im p li ca t i on s of F a l li n g P r im a r y C o mm od it y

    Pr ices for Agricul tural Stra tegy in the P hi l ippines

    If zal Al i, September 1987

    N o. 3 7 D e t er m in in g I r r ig a t i on C h a r g es : A F r a m ew o rk

    Prabh akar B. Ghat e, October 1987

    No. 38 The Role of Fer t il izer Subsid ies in Agr i cul tura l

    P roduction: A Review of Select Iss ues

    M .G. Quibri a, October 1987

    N o. 3 9 D om e st i c Ad ju s t m en t t o E x t er n a l S h ock s

    in Developing Asia

    J un gsoo Lee, October 1987

    No. 40 Improv ing Domest i c Resource Mobi li za t i on

    through Financial D evelopment : I ndonesia

    Phil ip Er quiaga, November 1987

    No. 41 Recent Trends and Issues on Foreign Di rect

    Investment in Asian and Pa cif ic Developing

    Countries

    P.B. Rana, Mar ch 1988

    N o. 4 2 M a n u fa c t ur e d E xp or t s f r om t h e P h i li pp in e s:

    A Sector Profile and an Agenda for ReformI. A li , September 1988

    N o. 4 3 A F r a m ew or k for E v a l ua t i n g t he E con om ic

    Benefi ts of P ower P rojects

    I . Al i , August 1989

    N o. 4 4 P r o m ot i on o f M a n u fa c t ur e d E xp or t s in P a k is t a n

    J un gsoo L ee and Yoshi hi ro Iw asaki , September

    1989

    N o. 45 E d u ca t i on a n d La bor M a r ke t s i n In d on e si a :

    A Sector Survey

    Er nesto M . Perni a and Davi d N . Wilson,

    September 1989

    N o. 4 6 In d u st r ia l Te ch n ol og y C a p a b il it i es

    and Policies in Selected ADCs

    Hi roshi Kakazu, June 1990

    N o. 47 D e si gn i ng S t r a t eg ie s a n d P o li ci es

    for Managing Structural Change in Asia

    I fzal Al i , J une 1990No. 48 The Complet ion o f the S ingle European Communi ty

    Market in 1992: A Tentative Assessment of its

    Impact on Asian Developing Countries

    J.P. Verbi est and M in Tang, J une 1991

    No. 49 Economic Analys i s o f Investment in Power Sys tems

    I fzal Al i , J une 1991

    N o. 5 0 E x t er n a l F in a n ce a n d t h e Rol e of M ul t il a t er a l

    Financial Inst i tut ions in South Asia:

    Changing P a t t erns , P rospect s , and Chal l enges

    J un gsoo Lee, N ovember 199 1

    N o. 51 Th e G en d er a n d P o ve r ty N ex us : I ss u es a n d

    P olicies

    M .G. Qui bri a, November 1993

    No. 52 The Role of the S t a te in Economic Development :

    Theory, the East Asian Experience,

    and the Malays i an Case

    J ason Brown , December 1993No. 53 The Economic Benef i t s of Po t ab le Water Supply

    Projects to Households in Developing Countries

    Dale Whit t i ngton and Venkateswar lu Swarna,

    Januar y 1994

    N o. 5 4 G r o w t h Tr i a n gl es : C on ce pt u a l I ss u es

    and Operat ional Problems

    M in T ang and M yo Thant, Februar y 1994

    No. 55 The Emerging Globa l Trad ing Env i ronment

    and Developing Asia

    Arvin d Panagar iya, M.G. Quibr i a, and Nar har i

    Rao, July 1996

    N o. 5 6 As pe ct s of U r b a n Wa t e r a n d S a n it a t i on i n

    the Context of Rapid Urbanizat ion in

    Developing Asia

    Er nesto M. Pern ia an d Stella L F. Alabastro,

    September 1997

    No. 57 Chal l enges for Asi a s Trade and Env ironmentDouglas H . Brooks, Jan uar y 1998

    No. 58 Economic Analys i s o f Heal th Sector Pro ject s-

    A Review of Issues, Methods, and Approaches

    Ramesh Adh ik ari , Paul Gertl er, and A nneli

    Lagman, M arch 1999

    No. 59 The Asi an Cr i si s : An Al terna te View

    Raji v Kum ar and B ibek Debroy, Ju ly 1999

    No. 60 Soci a l Consequences of the F inanc ia l Cr i s is in

    Asia

    Jam es C. Knowl es, Ernesto M . Pern ia, and M ary

    Raceli s, November 1999

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    N o. 1 E s t im a t es of t he Tot a l E xt er n a l D eb t of

    the Developing Member Countries of ADB:

    1981-1983I.P. Davi d, September 1984

    N o. 2 M ult iv a r ia t e S t a t is t ica l a n d G r a p hi ca l

    Cla ssification Techniques Applied

    to the P roblem of Grouping Countries

    I .P. David and D .S. Mal igal ig, Mar ch 1985

    N o. 3 G r os s Na t i on a l P r od uct (G N P ) M ea s u re me nt

    Issues in South Pacific Developing Member

    Countries of ADB

    S.G. Tiw ari , September 1985

    N o. 4 E s t im a t es of C om pa r a b le S a vi ng s in S e le ct ed

    DMCs

    H anant o Sigit, D ecember 1985

    N o. 5 K eepin g Sa m ple Su rv ey D es ig n

    and Analysis Simple

    I .P. Davi d, December 1985

    N o. 6 E xt er na l Deb t Sit ua t ion in As ia n

    Developing CountriesI.P. Davi d and J ungsoo Lee, Mar ch 1986

    N o. 7 S t ud y of G NP M ea s ur em en t I ss ues in t h e

    South Pacific Developing Member Countries.

    Part I : Exist ing Nat ional Accounts

    of SPDMCsAnalysis of Methodology

    and Application of SNA Concepts

    P. Hodgk in son, October 1986

    N o. 8 S t u dy of G NP M ea s u re me nt I ss ue s i n t h e S ou t h

    Pacific Developing Member Countries.

    Pa rt I I : Fa ctors Affect ing Int ercountry

    Compara bi li t y o f Per Ca pit a GNP

    P. Hodgk in son, October 1986

    N o. 9 S u rv ey of t h e E x te rn a l D eb t S it u a t ion

    STATISTICAL REPORT SERIES (SR)

    in Asian Developing Countries, 1985

    Ju ngsoo Lee and I .P. David , Apri l 1987

    N o. 1 0 A S u r ve y of t h e E x t er n a l D eb t S it u a t ionin Asian Developing Countries, 1986

    Ju ngsoo Lee and I .P. David , Apri l 1988

    N o. 11 C h a n g in g P a t t e r n of F in a n ci a l Fl ow s t o As ia n

    and Pa cif ic Developing C ountries

    Ju ngsoo Lee and I .P. David , M arch 1989

    N o. 1 2 Th e S t a t e of Ag r icu lt u r a l S t a t is t ics i n

    Southeast Asia

    I .P. David, M arch 1989

    N o. 1 3 A S u r ve y of t h e E x t er n a l D eb t S it u a t ion

    in Asian and Pacific Developing Countries:

    1987-1988

    Ju ngsoo Lee and I .P. David , Ju ly 1989

    N o. 1 4 A S u r ve y of t h e E x t er n a l D eb t S it u a t ion i n

    Asian and Pacific Developing Countries: 1988-1989

    J un gsoo Lee, Ma y 1990

    N o. 1 5 A S u r ve y of t h e E x t er n a l D eb t S it u a t ion

    in Asian and Pacific Developing Countries: 1989-1992

    Mi n Tang, June 1991

    N o. 1 6 R ece n t Tr e nd s a n d P r os pe ct s o f E xt e r na l D e bt

    Si tuat ion and Financial Flows to Asian

    and Pa cif ic Developing C ountries

    Mi n Tang and Alu dia Pardo, June 1992

    N o. 1 7 P u r ch a s i ng P o w er P a r i t y i n As ia n D e v el op in g

    Countr ies: A Co-Int egrat ion Test

    M in T ang and Ronald Q. But i ong, Apr i l 1994

    N o. 1 8 C a p it a l F l ow s t o As ia n a n d P a c if ic D ev el op in g

    Countries: Recent Trends and Future P rospects

    M in Tang and Jam es Vill afuerte, October 1995

    N o. 1 P o ve r t y i n t h e P e op le s Re pu b li c of C hi n a :

    Recent Developments and Scope

    for Bank Assistance

    K.H. M oinuddin , November 1992

    N o. 2 Th e E a s t er n I sl a n d s of In don e si a : An O ve r vi ew

    of Development Needs and Potent ial

    Bri en K . Parkinson, January 1993

    N o. 3 R u ra l In s ti tu t ion a l F in a n ce i n B a n g la d es h

    an d Nepal : Review and Agenda for Reforms

    A.H.M.N. Chowdhury and M arcel ia C. Garcia,N ovember 1993

    N o. 4 F i sca l D ef ici t s a n d C u r re n t Accou n t Imb a la n c es

    of the South Pa cif ic Countries:

    A Case Study of Vanuatu

    T.K. J ayaram an, December 1993

    N o. 5 R ef or m s in t h e Tr a n s it i on a l E con om ie s of As ia

    Pradu mna B. Rana, D ecember 1993

    N o. 6 E n v ir on m en t a l C h a ll en g es i n t h e