Migrants represent 15% of Malaysia’s workforce, making the country home to the fourth largest number of migrants in the East Asia Pacific region. The migrant population is diverse, made up of workers from Indonesia, Bangladesh, Nepal, Myanmar, Vietnam, China and India, among many other countries.
There are about 245 million migrants worldwide – around 3% of the world population. Roughly one-fifth are tertiary educated. Middle-income countries have a smaller proportion of immigrants than high-income countries (about 1% versus 12%). But for a number of middle-income countries with more immigrants than others, there is uneasiness about relying on unskilled foreigners as they strive to leap from low-wage labor and imitation to high-skilled labor and innovation. There are palpable concerns in Malaysia, for example, with some 2.1 million registered immigrants – about 7% of its population - and likely over 1 million undocumented immigrants. Things reached a crescendo early last year when all new hiring of unskilled foreign workers was suspended as the Malaysian government re-evaluated the management and need for foreign workers. The freeze was subsequently lifted for select sectors amid complaints of labor shortages.
Both Malaysia and India are countries steeped in innovation with a strong desire to foster new, innovative start-up enterprises.
With a global focus on providing more support to Small and Medium Scale Enterprises (SMEs) – and recognizing that – Asian countries are keen to learn from each other’s experiences. These efforts have taken on a greater priority in India under the leadership of Prime Minister Modi and his “Make in India” and “Start-Up India” campaigns.
, which is one of the most widely recognized impediments to SMEs, particularly for start-up enterprises. Through the $500 million MSME Growth Innovation and Inclusive Finance Project, the World Bank supports MSMEs in the service and manufacturing sectors as well as start-up financing for early stage entrepreneurs. The start-up support under this project ($150 million) is for early stage debt funding (venture debt) which isn’t well evolved. (Unlike India’s market for early stage equity which is considered to already be reasonably well developed.)
As part of this project, the World Bank and the Small Industries Development Bank of India (SIDBI), recently held a workshop in Mumbai to allow market participants to learn from one another, and particularly about Malaysia’s successful support for innovative start-up SMEs. The workshop’s participants included banks, venture capital companies, entrepreneurs, fintech companies, seed funders and representatives from the Malaysian Innovation Agency (Agensi Inovasi Malaysia – AIM).
Islamic finance assets represent only around 1% of the global financial market, so how can tapping into these funds help close the $452 billion annual infrastructure finance gap in Emerging Markets and Developing Economies? The percentage may be small now, but the Islamic finance market is growing at an impressive pace—and not just in Muslim-majority countries.
What do you imagine when you hear the words “capacity development”? Most development professionals associate capacity development with training, seminars and perhaps study tours. Most of the countries the World Bank works in require a significant boost in their capability to implement policies, programs and projects, especially in countries supported by the Bank’s fund to the poorest, International Development Association (IDA).
For training to be sustainable and have high impact, it should be targeted to a particular public sector problem, and coupled with initiatives to improve organizational and institutional capacity.
In 1950, the average working-age person in the world had almost three years of education, but in East Asia and Pacific (EAP), the average person had less than half that amount. Around this time, countries in the EAP region put themselves on a path that focused on growth driven by human capital. They made significant and steady investments in schooling to close the educational attainment gap with the rest of the world. While improving their school systems, they also put their human capital to work in labor markets. As a result, economic growth has been stellar: for four decades EAP has grown at roughly twice the pace of the global average. What is more, no slowdown is in sight for rising prosperity.
High economic growth and strong human capital accumulation are deeply intertwined. In a recent paper, Daron Acemoglu and David Autor explore the way skills and labor markets interact: Human capital is the central determinant of economic growth and is the main—and very likely the only—means to achieve shared growth when technology is changing quickly and raising the demand for skills. Skills promote productivity and growth, but if there are not enough skilled workers, growth soon chokes off. If, by contrast, skills are abundant and average skill-levels keep rising, technological change can drive productivity and growth without stoking inequality.
- boost prosperity
- Knowledge and Skills
- job market
- job creation
- Social Development
- Public Sector and Governance
- East Asia and Pacific
- Solomon Islands
- Papua New Guinea
- Micronesia, Federated States of
- Marshall Islands
- Lao People's Democratic Republic
- Korea, Republic of
An instructor at the Savar EPZ training center in Dhaka, Bangladesh, helps young women being trained to make shirts. Photo Credit: © Dominic Chavez/The World Bank
Increasing economic prosperity for developing countries is related not only to rising trade, but also – and more important – to transforming the traditional composition of what they produce and export. In the world today, many developing countries strive to diversify away from exporting commodities toward higher-value-added goods and services.
The evolution of trade and investment flows over the last three decades shows that foreign direct investment (FDI) can be a powerful driver of exports, a creator of well-paid new jobs and a crucial source of financing. More important, FDI may become a very rapid and effective engine to promote the transfer of technology, know-how and new business practices, helping to raise productivity and setting a country on the course of convergence. This is particularly the case of efficiency-seeking FDI – that is, FDI that locates productive processes in a country seeking to enhance its ability to better compete in international markets-.
The benefits of FDI are further leveraged when local firms can catalyze the presence of foreign investors to connect to global and regional value chains (GVCs). As a result of new international firms investing in a host country, great new opportunities arise for local enterprises to supply the inputs – be it goods or services – that their international counterparts need.
This has been the experience of Bangladesh, where local suppliers have grown in tandem with foreign investors in the garment sector. It is through linkages with international investors that local firms can gradually be lured into producing new goods and services that, until then, were not produced in the host country. This is how economic diversification and greater value added are generated.
Multinational enterprises (MNEs) and their key partners (Tier 1 suppliers) are generally keen to source locally if a competitive local supplier can be found. However, they are also reluctant to absorb high search-and-find costs, and they will typically not invest in assisting local suppliers with upgrading efforts. Likewise, local firms are generally keen to supply to foreign firms, but are often not ready to make the necessary investments in technology and in processes to meet strict quality standards without a clear line of sight on potential payoff for such investment.
With the release last month of the latest PISA (Program for International Student Assessment) results by the OECD (Organisation for Economic Co-operation and Development), it is apparent that many of the highest achieving students in the world are in East Asia.
Just as in the recently released TIMSS (Trends in International Mathematics and Science Study) results, Singapore leads the world in every subject in PISA, outperforming other economies and countries by a significant margin. Students in Singapore perform at a level that is up to two years ahead of their regional and OECD counterparts in science, mathematics and reading. Moreover, almost all Singaporean students have reached a basic level of proficiency or higher. And they just keep getting better, having significantly reduced performance below basic proficiency.
Japan also outperforms most participating economies in science, mathematics and reading. However, its score in reading has declined since the last round. Still, as in Singapore, 90% of students have reached a basic level of proficiency or above.
People who look at the Doing Business report’s Trading Across Borders indicator and the Logistics Performance Index (LPI) often wonder why one country can perform well on one of the rankings but not so well on the other although they both measure trade and logistics. In fact, earlier this year, the Doing Business team organized a workshop at the World Bank Global Knowledge and Research Hub in Kuala Lumpur to clarify the differences between the two datasets.
Let’s start off with a few definitions:
The Doing Business report is a World Bank Group flagship publication, which covers 11 areas of business regulations. Trading Across Borders is one of these areas. It looks specifically at the logistical processes of exporting and importing. Data is updated annually and the latest edition covers 190 economies. Doing Business collects data from local experts and measures performance as reported by domestic entrepreneurs, while taking into consideration factual laws and regulations.
The Logistics Performance Index is a benchmarking tool which focuses on trade logistics. It is created to help countries identify the challenges and opportunities they face as they relate to customs, border management, transport infrastructure, and logistics services. Updated biennially, the latest data and report cover 160 economies. Data is collected from global freight forwarders and express carriers who provide feedback on the logistical “friendliness” of the countries they operate.