Suppose that one were to divide the countries included in the latest Doing Business report into two groups. Call the first group (made up of some 44 countries) the “worst quartile”—that is, the countries with the costliest and most complex procedures and the weakest institutions. Call the other group the “best three quartiles.” Then let’s ask ourselves: how many days did it take to establish a business in both groups in 2005? The answer is 113 days in the worst quartile and 29 days in the best three quartile countries, meaning that in 2005 there was a gap of 84 days between the two sets. Now, let’s repeat the exercise for 2013. The worst quartile is down to 49 days and the best three quartiles is down to 16; the gap between the two has narrowed to 33 days, which is still sizable but a lot less than 84. Repeat the same exercise for time to register property and time to export a container. For property registration, the gap in 2005 was 192 days and by 2013 it has narrowed to 63. For time to export, the gap in 2005 was 32 days and in 2013 it was down to 23. (The figures are presented in the charts below. Only a small subset of the indicators has been included here, for illustrative purposes).
Europe and Central Asia
The issue of social inclusion in Turkey is a controversial one. In this blog, I want to present some data that suggest Turkey experienced inclusive growth over the past decade or so. My colleagues and I have shared this basic story with a number of audiences in Turkey and often the reaction is disbelief. So what does the data say?
The bottom 40 percent can look up
I use three pieces of evidence to make my case. The first is based on recent work by Joao Pedro Azevedo and Aziz Atamanov of the World Bank on shared prosperity. Joao Pedro and Aziz’s work is ongoing and much richer than what I want to present here. So let me just focus on the following chart, which shows the growth of consumption of the bottom 40 percent in Turkey between 2006-2011 and in a number of other countries during roughly the same period. Turkey looks reasonably good albeit not exceptional. The rate of consumption growth of the bottom 40 percent was just over 5 percent, around 0.2 points below the rate of growth for the average. What this means is that during this period of significant global economic turbulence the average welfare of the bottom 40 percent improved by more than one quarter. This was better than India, Indonesia, or Mexico, albeit worse than Brazil, China and Russia.
Even though it was windy and dark outside, Vivien Suerte-Cortez was smiling and full of energy on the stage. Suerte-Cortez is an accountability and transparency expert from the Philippines. Dressed in her gray jacket, she started to talk about Citizen Participatory Audit (CPA), a project in the Philippines that encourages citizens to participate in the audit process for government projects and explores how to ensure efficient use of public resources by the government.
You’d probably be skeptical if I told you that the Western Balkans – a region that has long suffered from social and ethnic fragmentation – now has a strong opportunity to boost shared prosperity by promoting research, innovation and entrepreneurship. Your views might not even change if I showed you that such idea is validated by preliminary studies linking research and innovation to the performance of firms and countries in the region.
You might be surprised – yet your initial assumption might be unchanged – if I told you about the kind of companies that are starting to build a different economic landscape in the region: firms like UXPassion, Pet Minuta, Strawberry Energy or Teleskin, which are all technology-based startups created by young researchers who became entrepreneurs. Click on this link (http://www.worldbank.org/en/news/video/2013/10/22/western-balkans-research-and-development-for-innovation), or on the video embedded below, to meet them and other innovators from the Western Balkans.
Indeed, the transition to a market economy and the breakup of the former Yugoslavia starting in 1991 had a severe impact on the research and innovation sector in the Western Balkans. Research capacity narrowed significantly, and R&D’s links to the productive sector of the economy disappeared. The new industrial structure has naturally a lower propensity to invest in research while the current business environment promises low returns to the enterprise investments in innovation. Efforts to revamp the region's research and innovation sector were most of the time short-lived.
As a result, the performance of the research and innovation sector in the Western Balkans is gloomy. The region’s current investment in R&D are roughly the same amount as the investment by just the second-largest university in the United States. (In 2012, for example, only 38 patents from the region were registered with the U.S. Patent and Trade Office – compared to the average of 27 patents registered by each American university.) At the same time, very little of those investments are efficiently transformed into wealth. For example, for each invention that received a patent, the region spent, on average, three times more in R&D resources than does the United States.
Building on a continuing series of efforts to reform their national innovation systems, in the hope of changing their gloomy prospects, the Western Balkan countries in 2009 committed to develop a joint regional research and innovation strategy. That strategy, developed between 2011 and 2013, was formally endorsed last month by the ministers responsible for science and education from Albania, Bosnia-Herzegovina, Croatia, Kosovo, the Former Yugoslav Republic of Macedonia, Montenegro, and Serbia. The preparation of the strategy, which benefited from technical assistance by the World Bank and from the financial support of the European Commission, involved representatives from the region’s leading universities, research institutes, private sector firms and government agencies. Discussions of the draft proposal were pursued in all seven countries as part of a large outreach exercise.
In the 1970s and early 1980s my family’s yearly vacation trip from Southern Germany to Greece involved a grueling 36 hour trek through the infamous “Auto-put”: Maribor-Ljubljana-Zagreb-Belgrade-Nis-Skopje-Evzoni. The trip was hazardous, always an adventure. To fill our car in “socialist Yugoslavia”, we had to buy gasoline vouchers upfront at the border.
We drove a Fiat 132 which served us well during these long road trips. These memories came back to me when a World Bank team recently visited the brand new FIAT car factory in Kragujevac, two hours South of Belgrade. This is a high stakes investment for FIAT and a strong signal for Serbia’s dormant manufacturing. The factory is producing the new 500L (in several different variants), a modernized version of its legendary Cinquecento. Early this October, the company and the factory celebrated the first anniversary of the 500L’s regular production. During that year, some 100,000 units were produced, overwhelmingly for export around the world, including to the USA. As a result FIAT is now Serbia’s largest exporter (over a billion euros’ worth -15% of total exports of goods from Serbia- in the first three quarters of 2013 ). Just two years before, exports of vehicles amounted to 2% of total exports (see figure). Today, Kragujevac is producing 600 cars daily and has created more than 3,000 jobs with the potential for more. Importantly, a network of suppliers is springing up, both in Kragujevac, as well as in other towns in Serbia.
More than 95 percent of goods traded between Europe and Asia are transported via deep sea. All of this happens through two primary routes-- some serious traffic. But it's far from stop-and-go. In fact, most doesn’t stop at all.
Large container ships leave ports in Asia and proceed directly to Rotterdam, the Netherlands. Many choose to get there by passing through the Suez Canal, entering the Mediterranean, and bypassing its bygone empires.
One of these ancient powers, Greece, now finds itself in a marginal position on the logistical map of Europe. Despite being geographically and economically well located, it’s far from being the hub it once was. The World Bank’s International Trade Unit and the Transport Unit of the World Bank’s Vice Presidency for the Europe and Central Asia Region recently teamed up with the government of Greece to find out how the country can capture a share of the world’s growing East-West trade and kick-start an economy that has been struggling to maintain GDP growth after the global economic crisis.
One of my first assignments in the World Bank, some 13 years ago, was in a small and complicated country, better known for coups and mercenaries than for statistical capacity. Before I set off to the Comoro Islands, my then manager (now an established World Bank Vice-president) gave me the following priceless advice: “When you get there, make sure to get a lot of data. It may be difficult to get and sometimes even flawed, but data has one great advantage: It cuts through a lot of crap.”
Numbers are indeed beautiful. They can help bring clarity to our lives and save us time as well as resources. But raw data can be messy and you also need a good system for deciding which numbers to use and how to interpret them. Last week’s launch of the 2014 Doing Business rankings reminded me of the advice my then boss had given me. Doing Business started from the premise that companies are the backbone of any economy but that investors often lacked knowledge of the conditions in “frontier economies”. With the benefit of an annual assessment of the business environment in each country, investors could make more informed decisions. As for policy makers, they could more easily attract investors, provided they made a genuine effort in cutting red tape and supporting businesses.
"Project Greenback 2.0 – Remittance Champion Cities" was launched on October 29 in Turin, Italy.
A team from the World Bank's service line on Financial Infrastructure, hosting the launch event, was thrilled to welcome a room full of migrants, market paricipants, public officials, policy researchers and private-sector observers.
Since March 2013, in partnershp with the Turin city government, the World Bank team has been preparing for the launch of Project Greenback 2.0, which aims to foster the development of a sound and efficient market for remittances. The project pursues an important new approach: It focuses on remittance senders, and its priority is meeting their needs.
In the first months of our efforts in Turin, we have been working on a survey among remittance senders, and we have been mapping and monitoring the services that are available to them when they seek to send money home. The survey focused on Romanians, Moroccans and Peruvians – the most numerous immigrant groups in Turin, who together account for more than 60 percent of the city's immigrant population.
So you think the last thing young people want to discuss is politics or business strategy? Think again.
As a young woman actively involved and passionate about the role of youth in civil society, I was interested when the World Bank brought together youth from Kazakhstan, the Kyrgyz Republic, and Tajikistan to talk about exactly that.
Talk about timing! This week has seen back-to-back initiatives that underscore the growing importance of Islamic finance – and the significant role that the World Bank Group can play in unleashing its potential for financing international development.
This Tuesday, October 29, Prime Minister David Cameron of the United Kingdom announced that the U.K. will become the first non-Muslim country to issue a Sukuk or Islamic bond, with a £200 million issue planned for early 2014. Cameron also announced plans for a new Islamic index on the London Stock Exchange. These initiatives are all part of a grand plan by the U.K. government to turn London into a global capital of Islamic finance.
The very next day, on Wednesday, October 30, World Bank Group President Jim Kim inaugurated the World Bank Global Islamic Finance Center in Istanbul. Envisioned as a knowledge hub for developing Islamic finance globally, the center will conduct research and training as well as provide technical assistance and advisory services to World Bank Group client countries interested in developing Islamic financial institutions and markets.