July 2009

Excerpt from the budget speech (July 13, 2009, para 139) by the Nepal finance minister for the new fiscal year beginning this month:

"An arrangement has been made to issue "Infrastructure Development Bond" of an amount of Rs. 7 billion by Nepal Rastra Bank fixing pegged exchange rates targeting the Nepalese working abroad through Nepalese Embassies in South Korea, Malaysia, United Arab Emirates, Saudi Arabia and Qatar, as a part of domestic borrowing for the coming fiscal year. Such Bonds can be purchased only from workers working abroad. From this arrangement, the remittance can be used for infrastructure development and the remittance itself remains free of additional charges while transmitting to Nepal. In addition to it, I am confident that such workers employed abroad will receive interest from the day of bond purchase and be benefitted."

I love travelling to Afghanistan: friends and colleagues stare at me with puzzled, frightened looks. For Afghanistan is invariably associated with the Taliban, poppy fields, Sharia and women covered in blue chadri (burqa). The azure blue chadri has been displayed as the epitome of women's subordination to men and their lack of rights. In Andrei Konchalovsky's film, the First Teacher (1965), the schoolmaster strips off a black niqab from a young Kirghiz girl, his gesture liberates women from backward traditions and brings them a promising future. Twentieth century Kirghiz girls, twenty-first century Afghan women... same struggle?

The first time I set a foot in Afghanistan, women were not compelled to wear the fully covering chadri. But I saw no bare-headed woman. Wandering around Shahr-e Nau park, striding along the winding streets of Shor Bazaar, feeding doves at the crack of dawn in Mazar-e Sharif, picnicking on Friday afternoon in Babur gardens, I saw Afghan women in all shapes and shades of head covers.

Como mencioné en mi anterior post, nuestra Nota Informativa No 10, la cual presenta una revisión de las perspectivas de las remesas, ha generado un gran interés en el mercado financiero, entre los analistas, investigadores, y en los medios de comunicación. El Financial Times escribió un editorial basado en nuestra nota. Aun una pequeña disminución del 7.3% en los flujos de remesas, según nuestras estimaciones, puede ocasionar un impacto a los países que enfrentan déficits de financiación externa. Ahora sabemos que la resistencia a la disminución de las remesas en el futuro fue un factor importante detrás del éxito del lanzamiento de los US $ 750 millones mega-bono de Filipinas.

El video adjunto es una versión muy corta de nuestras estimaciones sobre las tendencias de las remesas en el 2009.  

Dilip Ratha, economista principal y experto en remesas, Banco Mundial from World Bank on Vimeo.

The World Trade Organization (WTO) released its flagship Annual Report (2009) on the 22nd of July. Each year, the annual report focuses on a topic of special interest to the global trading community. It didn’t require much guessing to figure out that this year’s report would have something to do with the ongoing financial crisis and its impact on trade. But precisely which aspect of the financial crisis is most important for trade policy today?

The WTO has identified increased protectionism as the biggest danger. In a nutshell, under recessionary pressures, a country is tempted to erect higher trade barriers to shift demand from foreign-made to home-made goods, thereby stimulating its own economy. The problem here is that when all countries resort to protectionism, global welfare is lower (gains from trade are lost) and the recessionary pressures intensify.

This is a summary of materials available from ILO and World Bank.

The financial and economic crises of 2008 had gender-specific impacts and placed a disproportionate burden on women, in particular poor, migrant and minority women. Even though both women and men are affected by job losses, women are often laid off first, as men are traditionally considered to be the main “breadwinners”. Some of the implications of the global financial and economic crisis on women are:

"Public opinion represents a consensus, which emerges over time, from all the expressed views that cluster around an issue in debate, and that this consensus exercises power."

-- Cutlip, S M, Center, A H and Broom, G M (1994) Effective Public Relations, Prentice-Hall International Inc, 7th edn.
 

With Sanket

Newly available data show that remittance flows to developing countries reached $328 billion in 2008. In India, flows were stronger than expected in 2008 reaching $52 billion, up 34% compared to a year ago, and higher than our earlier estimate of $45 billion. India retains its position as the top recipient of migrant remittances among developing countries, followed by China, Mexico and the Philippines (figure 1).

Figure 1. India was the top recipient of migrant remittances among developing countries in 2008

Photo © Rachel Block/World Bank

Reading the newspapers last January when Russia suspended the supply of gas to the rest of Europe—with Eastern European countries hardest hit—I could not help but think that the region might be better off with fewer sub-zero days during winter.

On a trip to the Balkans last year, I partook of the colorful summer bounty of peppers and tomatoes enjoyed throughout southern Russia and Southeastern Europe. 

What a contrast from the pickles and cabbage my great-great-grandparents subsisted on in Poland and Lithuania! Though I was raised “properly”—with a taste for pickled cauliflower and herring—I could see why the northern reaches of the region might appreciate a longer growing season and more sunny, tomato-ripening days.

Studying (and contributing to) projections of global food supply in the changing climate over the next century, I see precipitous drops in yields projected in already-poor swaths of Africa, and in densely populated and cultivated regions in South and East Asia.  But many have concluded that, globally, there will be enough food to go around—thanks to the expanding role of Europe and Central Asia as the breadbasket of the world—and assuming free and fair international trade in food.
 
A recent report by the World Bank, “Adapting to Climate Change in Europe and Central Asia,” argues that these outcomes can by no means be taken for granted.

Editor's Note: Swarnim Waglé is a consultant with the Investing Across Borders indicators project of the World Bank Group.

Ha-Joon Chang, a teacher at the University of Cambridge in England, describes himself as a “heterodox” economist and has been a long-time critic of the World Bank and the IMF. A few weeks ago, he was invited to be a keynote speaker at the recent 2009 Annual Bank Conference on Development Economics (ABCDE) in Seoul, where he revived an old debate on industrial policy that many might have considered settled had the latest economic crisis not struck.

Public sector firms face a “soft budget” constraint in the sense that the government can bail them out for the losses they incur. Hence, managers can follow their own interest or favor special interest groups without worrying much about the costs of such actions. In short, soft budgets tend to promote corruption.

One solution to this soft budget driven corruption is privatization with a firm pre-commitment on the part of the government to not bail out the firm in the future. So, we should expect greater satisfaction with privatization among consumers in countries that are more corrupt. According to a recent study by Martimort and Straub (2009), quite the opposite is happening in Latin America. Consumer dissatisfaction with privatization efforts over the last two decades has increased, and especially so in countries that are more corrupt or where corruption has increased over time (see figure below the jump).

As interdependence between the developed (North) and developing countries (South) becomes greater, the economic policies of the North will invariably impact on the South. Globalization, defined as the increasingly free flow of ideas, people, goods, services, and capital that leads to the integration of economies and societies, has become a major force for global change, but much remains to be understood about the transmission channels and potential impacts.  The developing countries commonly complain that the global system is a ‘creditor-run financial system’ and as such, maintaining the stability of the financial system is more important for the advanced countries than mitigating financial crisis in any particular country.