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Using a unique panel survey of enterprises, we examine the relationship between four categories of formalization and firm productivity. We carry out one- and two-step productivity estimations whose robustness we check with matching and doubly robust estimators. The only formalization category that appears to be significantly associated with productivity is tax formalization, i.e. a firm's decision to pay taxes. This positive association only holds for firms that were already more productive and bigger before formalizing than other informal firms. The reason for the insignificance of the remaining three categories is likely to be the insignificant association between formalization and potential benefits of formalization, such as more access to credit, employees, and investments. High taxes and fees linked to formalization seem to outweigh the few to non-existent intermediate benefits of formalization.

Natural resources can make diversification and structural change more challenging. This chapter focuses on why public policy matters. International competitiveness depends on both relative prices and on the policy and institutional changes and investments that governments make to enhance it. Drawing on the five country case studies in this volume, the authors suggest lessons for the design of policies to promote structural change in Africa's resource exporters. They address the three key themes—managing the boom, the construction sector, and linking industry to the resource—then propose ideas for widening options for structural change. These include reforms to deal with 'Dutch disease', expanding the concept of structural change from a focus on industrialization to 'industries without smokestacks', and investing in knowledge.

Tax, and public-sector matters more generally, is high on the agenda of international development. This is clearly reflected in the Sustainable Development Goals (SDGs) approved by the United Nations General Assembly in September of 2015. SDG17 addresses the need for improving domestic resource mobilization (DRM) directly, and most of the other SDGs cannot be achieved without adequate tax and spending policies. To give just a few examples, SDG10 (reduced inequalities) will depend on government capacity to redistribute income, whereas SDG8 (decent work) requires that tax systems do not create an unnecessarily large burden on economic efficiency. Together these goals reflect the classic efficiency–equity trade-off, which is at the heart of public economics research and policy analysis. Finally, unless all households have sufficient market income (a highly unlikely scenario), the very first SDG (eradicating poverty) requires the presence of social safety nets, which must be financed by public monies. This is the backdrop, against which UNU-WIDER organized a WIDER Development Conference on the theme of "Public Economics for Development" in Maputo, Mozambique, 5–6 July 2017. The conference was wide-ranging, including papers and keynote lectures on all areas of public economics, as applied to developing country contexts. This special issue includes five studies from the conference. In what follows, we first reflect briefly on a set of key issues when researching the public sector in developing countries before summarizing the selected articles.

There is increasing recognition that the market imperfections on which theoretical arguments for industrial policies rest are widespread in low-income countries, and that well-designed government policies can contribute to improved economic outcomes. There is also greater understanding that the private sector has a central role to play in formulating and implementing industrial policy. Because much of the information relevant to policy-making is held by firms, some form of structured engagement—often referred to as close or strategic coordination—between the public and private sectors is needed, both to assist in the design of appropriate public actions and to provide effective feedback on their implementation. This introductory chapter provides an overview of common themes and outlines a set of forward-looking ideas for strengthening public–private coordination in Africa. It argues that these ideas must form part of any development agenda for Africa in the years to come.

The notion that foreign aid harms the institutions of recipient governments remains prevalent. We combine new disaggregated aid data and various metrics of political institutions to re-examine this relationship. Long-run cross-section and alternative dynamic panel estimators show a small positive net effect of total aid on political institutions. Distinguishing between types of aid according to their frequency domain and stated objectives, we find this aggregate net effect is driven primarily by the positive contribution of more stable inflows of 'governance aid'. We conclude the data do not support the view that aid has had a systematic negative effect on political institutions.

Agriculture and food cultivation production remains a key sector in the Vietnamese economy in terms of productive activities, income generation, and national export earnings. Higher world market prices should therefore in principle have a beneficial impact on rural farmers. This is based however on the assumption that world prices are transmitted and that farmers have the capacity to respond. In addition, many poorer farm households may be net consumers. Using data from the Vietnam Access to Resources Household Survey (VARHS) and the Vietnam Household Living Standard Survey (VHLSS) combined with available macro-data, this paper investigates how global price changes appear to have impacted on rural welfare in Vietnam during 2006-12. In this paper we study the case of rice in Vietnam, in the context of the 2008 food price spike. We analyse the responses of domestic producer and consumer prices, and discuss the policy actions taken by the government to help reduce the impact on consumers, as well as to continue to encourage production. We also look at the distributional impact of the resulting domestic price changes, using data from a specialist rural household survey to look at production response. Vietnam was effective in taking policy actions to limit the extent of transmission of the world price changes; and more poorer households benefitted from the price increase than lost.