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Macroeconomics and Economic Growth

Can Kenya replicate Indonesia’s turnaround?

Wolfgang Fengler's picture

JakartaRecently, a friend from Indonesia visited me in Nairobi. He is one of the world’s leading experts on social development and a long-term Jakarta resident. One of his observations stuck in my mind: “Kenya is just like Indonesia ten years ago”, he said. 

Comparing Kenya with Indonesia is counterintuitive—except perhaps when it comes to traffic jams—because of the many differences between the two countries. Indonesia is the world largest island state with more than 17.000 islands and a demographic heavyweight with 240 million people (six times more than Kenya). It is also 85 percent Muslim, while Kenya is about 85 percent Christian. Indonesia has massive natural resources – coal and gas (and some oil) – that it exports to other Asian countries, especially China, while Kenya’s economy is fuelled by a strong service sector.

There are many more reasons to challenge a comparison between these two countries but when one digs below the surface, there are also some similarities. Economically my friend was spot on: in GDP per capita terms, Kenya is roughly at the level of Indonesia a decade ago (about US$800 per capita). Today Indonesia is far ahead, but I don’t see any reason why Kenya couldn’t follow suit. Indeed, Indonesia is a good benchmark case for Kenya because it was never a “star reformer”, but instead a consistently strong performer.

Diamonds May Be Forever, Natural Resource Wealth Is Not

Otaviano Canuto's picture

Photo: Gennadiy KolodkinImagine a low-income country in the developing world suddenly discovering a large endowment of natural resources within its borders. Perhaps a large oil reserve is found just offshore, or a deposit of valuable natural minerals is uncovered just below the earth’s surface. Surely, such a discovery would be a blessing, as it would expand the country’s total stock of capital.

Prospects Weekly: The up-tick in market tensions have caused CDS rates to rise sharply

Global Macroeconomics Team's picture
The up-tick in market  tensions following recent bank downgrades, partial nationalizations and elections have caused CDS rates to rise sharply, although in most countries they remain below their fall 2011 highs. Stock markets have also tumbled, exchange rates depreciated and the turmoil has contributed to falling commodity prices.

Latin America: Most still keep their money under the mattress

Asli Demirgüç-Kunt's picture

También disponible en español

money under the mattress

Handing out a debit card or a 10 dollar bill to the fast-food franchise attendant is probably as natural to most people as buying their lunch every day. Many don't see this as a separate process but as an intrinsic part of the whole "getting lunch" deal.

This, however, doesn't hold true for 250 million people in Latin America and the Caribbean. Over 60 percent of Latin Americans adults are still unbanked and, as a consequence, unable to access plastic, checks, credit or other forms of banking tools that make life easy –and, in some cases, help achieve life goals such as buying a home or saving for retirement.

Connected to Compete? Not as Much as We Could Be

Otaviano Canuto's picture

Trade logistics, or the capacity of countries and companies to ship goods to international markets, is a key ingredient for economic competitiveness, growth, and poverty reduction. Poor logistics performance creates a deadweight loss for producers and consumers alike, and results in a net waste of resources. Improved trade logistics, on the other hand, would give a welcome boost to the economy at a time of fragile recovery from the global recession.

What Will South Asia Look Like in 2025?

Ejaz Ghani's picture

South Asia is among the fastest growing regions in the world, but it is also home to the largest concentration of people living in conditions of debilitating poverty, human misery, gender disparities, and conflict. In my book, Reshaping Tomorrow, I ask if South Asia is Ready for the Big Leap. 

The optimistic view is that India will achieve double-digit growth rates benefitting the rest of South Asia. The pessimistic view is that growth will be derailed by structural and transformational challenges. Which of these two outlooks will prevail?

The Optimistic Outlook

The optimistic outlook is based on favorable trends, including improved governance, the demographic dividend, the rise of the middle class, and the new faces of globalization. 

All countries in the region have an elected government for the first time since independence leading to governance that is more focused on development. Improved governance will enhance the politics of democratic accountability; diminishing the importance of identity politics; and the rates of incumbency – the likelihood of a sitting politician being re-elected – are down.

Prospects Weekly: Market confidence has been rattled once again

Global Macroeconomics Team's picture

Market confidence has been rattled once again following recent election results in France and Greece. However, credit default swaps rates, while up, remain well below their fall 2011 highs. Through March, retails sales have continued strengthening among both developing and high-income economies, although weakness still persists in the Euro Area.

A wiki on Africa Youth Employment

Shanta Devarajan's picture

Ever wonder how a World Bank  flagship report gets written?  A team of experts drafts an outline and shares it with stakeholders for their comments, suggestions and inputs.  Based on this feedback, the team drafts the report and shares the draft for further comment, before publishing the final draft.

Today, we are proposing to write our flagship report on youth employment in Africa differently.  We are launching a wiki platform and inviting the world to participate in the writing of the report. The wiki contains the preliminary outline which you can revise and rewrite.  I emphasize that the outline is preliminary; it contains assertions that may not be borne out by further analysis (I know because I wrote some of them).  So please add to, subtract from and edit the outline.

 

Why are we doing this?  First, the topic of youth employment in Africa is so important that we need to engage as many people as possible in finding solutions.  And second, young people are so tech-savvy that this may be a way of harnessing that talent and energy.  

 

As you can imagine, the idea of writing a report on a wiki platform raised some questions, even from my teammates ("if you needed brain surgery, would you crowd source that too?"). But we decided that the benefits outweigh the risks.

 

Writing a report on a wiki is the logical extension of the World Bank's open knowledge and open data programs (link to these), not to mention this blog.

 

And if we succeed in collaborating with a large number of people, we could call it the world's development report.

Latin America to the world: lessons learned on austerity, growth, reforms

Hasan Tuluy's picture

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Made in Latin America

'Made in Latin America'. Wouldn't that be a great label? --one that would slowly work its way out of the realm of some imaginary Latin American products to become a real seal of approval for many endeavors and accomplishments by the region.

I'm in Miami for the Seventh Annual Latin America Conference to talk about the region's prospects to decision makers, and I can't think of a better place to come up with such label --'My-ami', I muse, the Latin American economic and social melting pot that has been called many times the region's business capital.

To boost trade between Ghana and Nigeria: implement existing commitments

Mombert Hoppe's picture

Most people seem to think that intra-African trade could be substantially larger than it currently is. This would explain the recent statement of the heads of the African Union to “boost” intra-African trade substantially and to create an Africa-wide Free Trade Area by 2017.


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