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Local content in extractive industries: a tool for economic diversification and sustainable development

Anita Marangoly George's picture
Photo by Dominic Chavez / World Bank

When you ask young people from developing countries what they want for their country, they often say opportunity. The next generation wants jobs and knowledge; they want to be connected to the global economy.

Extractive industries can foster these types of opportunities through investment in skills training and transfer of technology to local workers and companies. These technical skills are demanded in the global marketplace today and empower workers to expand their horizons and lower their risk of unemployment. 

We are discussing these issues today at a “Reconciling Trade and Local Content Development” conference we are co-hosting with the Mexican Ministry of Economy. This event aims to share knowledge on how investment in extractive industries can be leveraged to generate opportunities for economic diversification and employment.

When extractives companies include local business in their supply chain they foster sustainable growth and help end poverty. The most valuable contribution to long term sustainability comes from the ability of extractive industries to generate benefits through productive linkages with other sectors. The International Finance Corporation (IFC) helped make this happen in Barmer, India, where we supported a Skill Development Center that trained 7,000 people to work in the operations of Cairn Energy. Not only did this training create direct job opportunities for the local population, but the acquired skills fostered the creation of an entire eco-system of small and medium-size enterprises that provided products and services to the oil company and related sectors.

Six stories show renewable energy underpins a climate-friendly future

Andy Shuai Liu's picture

Also available in: Arabic | French | Spanish


In 2015 the world saw great momentum for climate action, culminating in a historic agreement in December to cut carbon emissions and contain global warming. It was also a year of continued transformation for the energy sector. For the first time in history, a global sustainable development goal was adopted solely for energy, aiming for: access to affordable, reliable, sustainable and modern energy for all.
 
To turn this objective into reality while mitigating climate change impacts, more countries are upping their game and going further with solar, wind, geothermal and other sources of renewable energy. As we usher in 2016, these stories from around the world present a flavor of how they are leading the charge toward a climate-friendly future.  
 
 World Bank Group

1: Morocco is rising to be a “solar superpower.” On the edge of the Sahara desert, the Middle East’s top energy-importing country is building one of the world’s largest concentrated solar power plants. When fully operational, the Noor-Ouarzazate power complex will produce enough energy for more than one million Moroccans and reduce the country’s dependence on fossil fuels by 2.5 million tons of oil.

Growing resilient forest landscapes in the face of climate change

Paula Caballero's picture
Andrea Borgarello for World Bank/TerrAfrica

Playing out this week and next in Paris is a high-stakes match between science and political will.
 
The science part is quite clear: 2015 is set to be the hottest year on record – a full degree over pre-industrial averages. Climate change is already taking a toll on countries. Add to that we have El Nino wreaking havoc in many parts of the world.  And it is going to get warmer.
 
The political analysis is more complicated. On the one hand, if the national plans, the Intended Nationally Determined Contributions (INDCs) drawn up by countries to tackle climate change were implemented, including actions that have been conditioned on available finance, this would likely put the planet on about a 2.7 C degree trajectory that would be catastrophic for the economic, social and natural systems on which we depend.  Clearly more needs to be done. On the other hand, it is a sign of welcome progress. The fact that almost all the world’s countries (Carbon Brief tracks 184 climate pledges to date) have put forward INDCs is a remarkable feat many would have considered impossible just a few years ago.  So there is progress, just not fast enough.
 
Paris should be seen as an important milestone in an arduous journey– a platform for generating an ever upward spiral of ambition in many fields of climate action.
 
One area that promises innumerable wins for people and the planet is land use change, agriculture, and forestry. Together these sectors account for about 24 percent of global emissions, but represent a much greater share of emissions in many developing countries. A preliminary analysis of INDCs shows strong commitment to reducing greenhouse gas emissions from deforestation, forest degradation, land use change and agriculture. And there is evidence of a growing appetite for landscape restoration measures in many of those countries. 

How digital financial services boost women’s economic opportunities

Leora Klapper's picture

Imagine having to skip work every month to travel to the city center just to pay your electricity bill or your child’s school fee? Would you not worry if your income relied on remittances and you were unable to pay rent because they were tied up in a network of agents? And wouldn't it frustrate you if you didn’t have a say in how your salary was spent or invested?

Having a bank account could help in all of these situations. Most of us probably have auto-pay set up so we don't need to worry about our monthly bill payments or money transfers. But the conveniences we take for granted are out of reach for the world's 1.1 billion women who lack an account. According to World Bank’s Global Findex database, men in developing countries are 9 percentage points more likely than women to own an account. The gap is largest in South Asia, where only 37 percent of women have an account compared with 55 percent of men.

Record investment in transport boosts overall private participation in infrastructure in 2014

Henry Kasper's picture

Imagine record commitments in transport that are 26% higher than the next best year since the inception of the Private Participation in Infrastructure (PPI) Database in 1990. That’s exactly what took place in 2014—massive private participation in transport that culminated in the fourth highest level of global investment (transport, energy, and water) ever recorded. Indeed, the PPI Database’s 2014 Global Update released in June, 2015, shows that total investment in transport hit a record high of US$36.5 billion, driven by a handful of outsized deals in
Latin America and, more specifically, Brazil—including a mega airport project totaling US$10 billion. Meanwhile, energy fell 19 percent year-over-year due to fewer commitments in five out of six regions, while water grew 14 percent, driven by key deals in Brazil, Mexico, and Peru. In a separate report, Telecom showed modest year-over-year declines, extending a trend of fewer projects and lower investment over the past five years.  

Boosting clean tech to power a low-carbon future

Zhihong Zhang's picture
 
A thermo-solar power plant in Morocco. Photo by Dana Smillie / World Bank.

Global warming can be limited by reducing or avoiding greenhouse gases stemming from human activities - particularly in the energy, industry, transport, and building sectorswhich together account for over 75% of global emissions. So low carbon technologies are key to achieving mitigation while creating new economic opportunities.
 
Since 2008, the $5.3 billion Clean Technology Fund (CTF) - one of the $8.1 billion Climate Investment Funds' (CIF) four funding windows—has been partnering with multilateral development banks (MDBs), including the World Bank and the IFC, to provide concessional financing to large-scale country-led projects and programs in renewable energy, energy efficiency and sustainable transport.
 
As the world gets ready for the climate negotiations in Paris later this month, the governing bodies of CTF met in Washington D.C. MDBs, donor countries, recipient countries and civil society organizations gathered to, among other things, share the results and lessons of how the CTF is reducing greenhouse gas emissions, creating energy savings, and improving the lives of some of the world’s poorest people by creating jobs and reducing pollution.
 
The CTF report card is based on the results from operational projects and programs over a one year period. In total, the CTF has achieved 20 mtCO2e in emission reductionsthat’s the equivalent to taking four and a half million cars off the road or shutting down six coal fired power plants.

A better way to build -- promoting sustainable infrastructure

Robert Montgomery's picture

As countries prepare to meet at the G20 summit in Turkey next week, global growth and infrastructure needs will be at the top of decision makers’ concerns. And rightly so: Infrastructure – roads, bridges, ports, power plants, water supply – drive economic growth in many countries by facilitating manufacturing, services and trade. But it’s not just a matter of building more. To achieve good development on a planet stressed by climate change and diminishing natural resources, infrastructure needs to be sustainable.

Cities: The new frontier of social protection

Keith Hansen's picture
photo: Dominic Chavez/World Bank

​Consider this: By the time you had breakfast this morning, the world’s urban population grew by some 15,000 people. This number will increase to 180,000 people by the end of the day and to 1.3 million by the end of the week. On a planet with such a vast amount of space, this pace of urbanization is like crowding all of humanity into a country the size of France.

Cities are where most of the world’s population lives, where more and more of population growth will occur, and where most poverty will soon be located. 

But why do so many people choose cities? Poor people constantly pour into Rio de Janeiro and Nairobi and Mumbai in search of something better. The poorest people who come to cities from other places aren’t irrational or mistaken. They flock to urban areas because cities offer advantages they couldn’t find elsewhere.  The poverty rate among recent arrivals to big cities is higher than the poverty rate of long-term residents, which suggests that, over time, city dwellers’ fortunes can improve considerably.

Can information on the economic returns to schooling motivate students to stay in school?

Rafael de Hoyos's picture
Rafael and his classmates when they were in high school in Mexico.
Photo Credit: Rafael de Hoyos / World Bank

With Ciro Avitabile

If I could plot the number of bad decisions I’ve made throughout my life against my age there would certainly be a large hump between 15 and 18. Among the many bad decisions I made during adolescence—and believe me there were many- leaving school never even crossed my mind. To stay in high school, I not only had to be present but needed to put in a minimum effort not to fail more than a certain number of subjects which would jeopardize my right to enroll the following year.

¿Puede la información sobre los retornos a la educación mejorar los aprendizajes?

Rafael de Hoyos's picture
​Photo Credit: Rafael de Hoyos / World Bank

Con la colaboración de Ciro Avitabile

Si pudiera graficar la cantidad de decisiones desacertadas que he tomado durante mi vida en función de la edad que tenía al momento de tomarlas, no cabe duda de que observaría una gran concentración de malas decisiones entre los 15 y los 18 años. Entre las numerosas decisiones desacertadas que tomé en la adolescencia —y, créanme, fueron muchas— jamás me pasó por la mente abandonar mis estudios. Para poder seguir en el bachillerato, no solo tenía que asistir a clases, sino que debía poner un esfuerzo mínimo para no reprobar más de una cierta cantidad de materias y arriesgar mi derecho a matricularme el año siguiente.


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