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Does political risk deter FDI from emerging markets?

Laura Gómez-Mera's picture

Investors touring a factory in Canada. Source - Province of British Columbia“Ask anyone you meet on the street whether political risk has risen in the last few years, and you’d likely get a convincing yes,” a high official from Canada’s Export Development Center recently wrote.
 
Investors have always worried about the political landscape in host markets. But it’s true. Concerns over political risk are on the rise.
 
The most recent EIU’s Global Business Barometer shows that the proportion of executives that identified political risk as one of their main concerns increased from 36 percent in 2013 to 42 percent in 2014. MIGA’s Political Risk Survey tells a similar story: 20 percent of investors identified political risk as the most important constraint on Foreign Direct Investment (FDI) in developing economies. Indeed, according to risk management firm AON, political risk is now tenth on the list of main risks facing organizations today and is likely to rise in the ranking in the next few years.
 
With FDI from emerging markets also on the rise, are the concerns of these investors any different?

Newest private participation in infrastructure update shows growth and challenges

Clive Harris's picture



In 2013, investment commitments to infrastructure projects with private participation declined by 24 percent from the previous year.  It should be welcome news that the first half of 2014 (H1) data – just released from the World Bank Group’s Private Participation in Infrastructure (PPI) database, covering energy, water and sanitation and transport – shows a 23 percent increase compared to the first half of 2013, with total investments reaching US$51.2 billion.

closer look shows, however, that this growth is largely due to commitments in Latin America and the Caribbean, and more specifically in Brazil. In fact, without Brazil, total private infrastructure investment falls to $21.9 billion – 32 percent lower than the first half of 2013. During H1, Brazil dominated the investment landscape, commanding $29.2 billion, or 57 percent of the global total.

Four out of six regions reported declining investment levels: East Asia and the Pacific, South Asia, Africa, and the Middle East. Fewer projects precipitated the decrease in many cases. Specifically, India has experienced rapidly falling investment, with only $3.6 billion in H1, compared to a peak of $23.8 billion in H1 of 2012. That amount was still enough to keep India in the top five countries for private infrastructure investment. In order of significance, those countries are:  Brazil, Turkey, Mexico, India, and China.

Sector investments were paced by transport and energy, which together accounted for nearly all private infrastructure projects that were collected in this update. The energy sector captured high investment levels primarily due to renewable energy projects, which totaled 59 percent of overall energy investments, and it is poised to continue growth due to its increasing role in global energy generation.

The energy sector also had the biggest number of new projects (70), followed by transport (28), then water and sewerage (12). However, transport claimed the greatest overall investment, at $36 billion, or 71 percent of the global total.

While we need to see what the data for the second half of 2014 show, what we have to date suggests that infrastructure gaps may continue to grow as the private sector contributes less. It also suggests that, in many emerging-market economies, there is much work to be done to bring projects to the market that will attract private investment and represent a good deal for the governments concerned. 
 

Financial inclusion: Stepping-stone to prosperity

Sri Mulyani Indrawati's picture

In Pakistan, Salma Riaz, right, shows Saba Bibi how to use her new cell phone to receive payments. © Muzammil Pasha/World BankTwo and a half billion people in the world do not have access to formal financial services. This includes 80% of the poor — those who live on less than $2 a day. Small businesses are similarly disadvantaged: As many as 200 million say they lack the financing they need to thrive.

This is why we at the World Bank want men and women around the world to have access to a bank account or a device, such as a cell phone, that will let them store money and send and receive payments. This is a basic building block for people to manage their financial lives.

Why is this so important? Financial inclusion helps lift people out of poverty and can help speed economic development. It can draw more women into the mainstream of economic activity, harnessing their contributions to society. And it will help governments provide more efficient delivery of services to their people by streamlining transfers and cutting administrative costs.

A step out of poverty

Studies show that access to the financial system can reduce income inequality, boost job creation, and make people less vulnerable to unexpected losses of income. People who are "unbanked" find it harder to save, plan for the future, start a business, or recover from a crisis.

Being able to save, make non-cash payments, send or receive remittances, get credit, or get insurance can be instrumental in raising living standards and helping businesses prosper. It helps people to invest more in education or health care.

The economic effects of India’s farm loan bailout: business as usual?

Xavier Gine's picture

In 2008, one year ahead of national elections and against the backdrop of the 2008–2009 global financial crisis, the government of India enacted one of the largest borrower bailout programs in history. The program known as the Agricultural Debt Waiver and Debt Relief Scheme (ADWDRS) unconditionally cancelled fully or partially, the debts of up to 60 million rural households across the country, amounting to a total volume of US$ 16–17 billion.

Let's empower women by empowering men

Maria Correia's picture
Sunday, March 8 marked International Women's Day, a celebration of women worldwide that dates back to 1977 when the UN General Assembly challenged its members to declare a day for women's rights and world peace. The 2015 theme is: 'Empowering Women, Empowering Humanity: Picture it!' 
WEvolve: Breaking Through Societal Norms that Lead to Gender-based Violence
Gender-based violence is a critical problem around the world with numerous negative consequences. With a global partnership, WEvolve believes young people – both men and women – can ‘evolve’ and take on new behaviors and healthy relationships that reduce the risk of gender violence and invests in activities to make this dream a reality. Join us.


We must continue to empower women. Women continue to face disadvantages in almost all spheres. But if we want a gender equitable society, empowering women is not enough.

We must also 'Empower Men'

We must also empower men. Of course, not in the conventional sense by giving men more power over women. Rather, by empowering men to challenge prevailing norms and change their behaviors. This is logical even though it has not been the prevailing approach. Gender is a "system" and both women and men are integral parts of this system. If we want to see meaningful change, both men and women are implicated. It is not enough to enlighten and empower women and expect men to follow.

This is not an easy thing. Men are critically judged and assessed - by themselves, by their peers, by their elders and by most women themselves - based on the dominant ideals of manhood. And across many societies, this still means exercising control over women, being tough, being strong. It also means achieving something, as terms such as "man-up" suggest, and many men, including low-income men struggle with this societal expectation. If men can't achieve and don't conform to these societal expectations, they are often socially sanctioned, belittled or ridiculed.

Challenging norms and behaviors is thus a collective challenge for men. It is also a challenge for women, who consciously or unconsciously often perpetuate these same social norms in the way they raise their sons or interact with men.

Make Available Resource for Men

Most gender initiatives continue to focus on women. This is understandable. But as we argue, we need interventions targeting and supporting men for change.

The largest and most extensive resource available for men is MenEngage, a global alliance made up of dozens of country networks spread across many regions of the world, hundreds of non-governmental organizations, and UN partners, that provides a collective voice to engage men and boys on gender issues. There are also other smaller more localized interventions, with the most innovative programming coming from the fields of HIV/AIDS, reproductive health and family planning, parenting, and domestic violence.

But we need to do much more.

Central to this premise of engaging and empowering men for change is understanding and unbundling this homogenous term called 'men'. In the case of gender-based violence for example, we identified five groups of men, each with different needs and potential roles:

Men who are victims of violence: need to break their silence and seek help
Men who use violence: need to seek help
Men who are silence spectators: need to speak out
Men who speak out: need to become agents of change
Men who are agents of change: need to continue to speak out and mobilize others

In coming up with a typology, we see how acute the needs are in supporting men. For example, how many hotlines are out there to support the men that need help? There is much work to do.

Empower Women by Empowering Men

As we just celebrated International Women's Day, let us continue to recognize women for all the advances and contributions they have made. But let us also 'empower women by empowering men' and recognize that we need new approaches and huge efforts to achieve this objective.

For more information how to get involved in the WEvolve campaign visit the website http://www.wevolveglobal.org.

Also join the conversation on social media.

Follow Maria Correia on Twitter: www.twitter.com/WEvolveGlobal

Originally published on Huffington Post Impact

The story of one thousand earthquakes

Saurabh Dani's picture
In early 2014 I saw a video circulated by a colleague, wherein someone from Japan had put together all the earthquakes that struck Japan between January 2011 to September 2011, essentially capturing the early tremors, the Great Tohoku earthquake of March 11, 2011 and subsequent aftershocks. It was a compelling visual which brought home the sheer intensity of the earthquake event. While the video was a visual representation of an event, could the same concept be used to create a product that could become a tool for raising awareness to a serious issue?
 
The Story of One Thousand Earthquakes
Over a one-year period from May 2013 to May 2014, there were a total of 1,247 recorded earthquake events of 4.0 magnitude or higher. It's time to get prepared.
 

With over 600 million people living along the fault-line across the Himalayan belt, South Asia’s earthquake exposure is very high. To further compound the problem, South Asia is urbanizing at a rapid pace and a significant growth in mega-cities, secondary and tertiary cities / towns is happening in high risk seismic zones. The region has experienced three large events over the past 15 years, the Bhuj earthquake of 2001, the Sumatra earthquake of 2004 (leading to the Asian tsunami) and the 2005 Kashmir earthquake. While there have been no major earthquakes these past 9 years, the region is akin to a ticking bomb for an earthquake disaster. Keeping this in mind, we mapped a region of 3000 Km radius from the center of India and analyzed earthquake events over a one-year period from May 2013 to May 2014. Only those earthquakes recorded by the United States Geological Survey’s global earthquake monitoring database (USGS) greater than 4.0 magnitude on the Richter scale were considered. We found a total of 1,247 recorded earthquake events. The story of a 1000 earthquakes was born and was a story that needed to be told.

We decided to create a video that would become an awareness tool and effectively communicate the risk the region faces. We deliberately steered away from talking about work being undertaken to reduce seismic risks or policy mechanisms that can be adopted. There are other mechanisms, mediums and opportunities to take that agenda forward. This is a short 90 seconds video and hopefully communicates the urgency of investing resources and efforts into earthquake safety. Increase the volume, enjoy, get scared. and then be prepared!

Arrival cities: migrants and social inclusion - Live online March 11

Maitreyi Bordia Das's picture
Follow the author on Twitter: @DasMaitreyi
 

Want to learn more about urban migration and social inclusion? Watch live discussion on March 11 at 12:30pm EST.
I just finished reading Doug SaundersArrival City – a fascinating book about cities as the fountains of development and dynamism. This portrayal isn’t by any means new, but Doug brings today’s cities alive, with stories of migrants who come from overseas or from villages.  Every city has its distinctive pattern, every informal settlement its own history.
 
Doug’s vivid account took me back to my hometown, Jaipur, Rajasthan, India: a city better known as a romantic tourist destination than as an “arrival city”. But there it is. A city that by most accounts, is very livable (perhaps that’s why angst against the city is low and it isn’t written about quite as much), and is host to thousands of migrants of all ilk.
 
Of the many that have over years begun to call Jaipur home, are families from Cooch Behar district in West Bengal. The bottom line is that women from Cooch Behar are overwhelmingly domestic workers in Jaipur homes. Why? For two reasons. First, Jaipur suddenly grew from being a mid-sized city in the 1990s to a thriving metropolis, up there among top ten Indian cities, by 2011, with a huge demand for domestic labor. 
 
Second, taboos and norms (which would have to be a whole other discussion) make local Rajasthani women reluctant to work in the homes of others. Strangely, it’s fine to work in others’ fields or on construction sites, but not in others’ homes. So, it is difficult for the rich and the growing middle class to find local women to work in their homes. I forgot to say that domestic workers are overwhelmingly women, in case anyone was wondering.
 
Why Cooch Behar: a district way out at the other end of the country? That’s a story of social networks that establish migration patterns. Jaipur was a princely state and the Maharaja married the princess of Cooch Behar – the famed Gayatri Devi, in whose entourage came the first set of ladies-in-waiting. Over time, this migration route solidified and fulfilled Jaipur’s demand for female domestic workers. Some micro studies show that almost half of all female domestic workers in Jaipur come from Cooch Behar.

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