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For their comments on this paper, the author is grateful to Michael Bruno, Bill Easterly, Jeff Hammer, Manny Jimenez, Peter Lanjouw, Lyn Squire, T.N. Srinivasan. Jacques van der Gaag, Dominique van de Walle, and the journal's three anonymous referees. These are the views of the author, and should not be attributed to the World Bank, its Executive Directors, or the countries they represent.