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Panama Papers underscore need for fair tax systems

Sri Mulyani Indrawati's picture

High-rises and hotel buildings in Panama City, Panama. © Gerardo Pesantez/World Bank

The so-called “Panama Papers” scandal reminds us that concealing wealth and avoiding tax payments is neither uncommon nor — in many cases — illegal. But the embarrassing leak exposes something else: The public trust is breached when companies, the rich and the powerful can hide their money without breaking the law. If this breach is left unaddressed, those who aren’t rich enough to hide money will be less willing to pay and contribute to the social contract in which taxes are exchanged for quality services.

As finance minister in my home country of Indonesia, I saw firsthand how a weak tax system eroded public trust and enabled crony capitalism. Shadow markets arose for highly subsidized fuel, family connections secured jobs, and bribes helped public servants beef up their salaries. Tax avoidance among the elites was common and the country couldn’t mobilize the resources we needed to build infrastructure, create jobs, and fight poverty.

Four months after Paris, renewed urgency on climate action and financing

Donna Barne's picture

World Bank Group President Jim Yong Kim speaks with Ségolène Royal, France’s Minister of Ecology, Sustainable Development and Energy, and Mark Carney, the governor of the Bank of England and chairman of the G20’s Financial Stability Board. © Dominic Chavez/World Bank

The world must move quickly to fulfill the promise of the climate change agreement reached in Paris four months ago and accelerate low-carbon growth, World Bank Group President Jim Yong Kim said on the opening day of the Spring Meetings.

More than 190 countries came together last December to pledge to do their part to halt global warming. The result was an unprecedented agreement to keep warming below 2 degrees Celsius over pre-industrial times, with the goal of limiting warming to 1.5° C.  

Expect no lines in front of the digital counters

Gina Martinez's picture
See high resolution here.

While countries around the world reap the benefits of an expanding digital environment, development challenges persist, adversely impacting low-income countries from achieving that same rate of growth.
 
The 2016 World Development Report (PDF) recently highlighted these findings in addition to three factors that contribute to a government’s responsiveness towards these digital changes.
 
According to the report, public services tend to be more amenable to improvements through digital technologies if the proposed system allows for fluid feedback, a replicable development process, and an outcome that can be easily measured and identified.
 
Here are five public services improved through digital technologies in five countries:

READ this: Why we must measure literacy at an early age

Harry A. Patrinos's picture
Also available in: Español
Measuring young children's skills in Malawi.


A couple of years ago Room to Read, a non-profit organization for improving literacy and gender equality in education in the developing world, implored viewers to try to not to read anything at all in a popular ad.  

Make in India: Which exports can drive the next wave of growth?

Saurabh Mishra's picture
Structural transformation depends not only on how much countries export but also on what they export and with whom they trade. In my new IMF working paper with Rahul Anand and Kalpana Kochhar, we break new grounds in analyzing India’s exports by the technological content, quality, sophistication, and complexity of India’s export basket. The paper can be found here. Here are few key pieces of evidence from our paper:
 
Technological content of India’s exports   

The evolution of Indian exports has not followed a “textbook” pattern. The pattern of evolution points to a dichotomy in the Indian economy – a well integrated, technologically advanced services sector and a relatively lagging manufacturing sector. The share of service exports in total exports has grown to over 32 percent in 2013 from 28 percent in 2000. On the other hand, the share of manufacturing exports in total export has declined to 67 percent from nearly 80 percent during 1990-2013.
 
The growth in service exports has been more rapid, resulting in the share of services exports in total exports to increase rapidly over the last decade. This can be explained by technological changes. Many services do not require face-to-face interaction, and can be stored and traded digitally. These services are called modern services. Modern services are the fastest growing sector of the global economy. This is particularly evident in India, where modern services exports account for nearly 70 percent of the total commercial services exports (compared to around 35 percent in EMs) (see Figure 1). 
      
Figure 1. Rapid Growth in Modern Services from India

Reforming the Centre of Government? It’s the basics, silly

Zubair Bhatti's picture
Riding the Lahore Rapid Transit -   photo: Asian Development Bank

Successful leaders —presidents of countries, chief executives of corporations, or middle managers of counties — focus on a few priorities by deploying the right resources, reviewing progress, and unblocking constraints.  
 
Shahbaz Sharif, the chief minister of the Pakistani province of Punjab (population 100 million) and a tireless, hard driving manager, built a 27 km mass transit system in Lahore in less than a year in 2012-13.  This visible show of results, according to many observers, helped his landslide victory in the 2013 election.
 
Did a specialized unit deliver for the chief minister? No. Just a group of well-chosen, motivated civil servants and, of course, the impending election deadline. 
 
What is therefore fundamentally new or useful about the current ferment in the “science of delivery”? The “delivery unit” approach can work wonders, according to Sir Michael Barber, who headed the Delivery Unit in the United Kingdom from 2001 to 20015 and has distilled his advice into 57 rules in a recent book.  


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