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Macroeconomics and Economic Growth

Can China become the engine for world economic growth?

David Dollar's picture

This somewhat provocative question was the title of a conference hosted by Oxford and Standard Charter this week in London.  My answer was: "No, not tomorrow; but yes, eventually – especially if China continues to vigorously pursue economic reform."
 
The reason that China cannot be the engine of global growth tomorrow is straight-forward.  For the last decade an awful lot of the final demand in the world has come from the U.S.  That era is over for the time being as U.S. households now concentrate on rebuilding their savings.  No one country can fill the gap left by the slowdown in U.S. consumption: Japan, Germany, and China together have less consumption than the U.S., so no one of them can replace the U.S. as the major source of demand in the world.  It's not realistic to expect China to play that role.  But we are probably moving into a more multi-polar period in which there is more balanced growth in all of the major economies. 

Regional Finance Roundup: Updates on Indonesia, China, and the Philippines

James Seward's picture

We are finally starting to see some positive news around the East Asia and Pacific region, but it is too soon to begin to speak of "green shoots" of economic activity or reaching the bottom of the economic downturn in Asia. Although the Swine flu (one disease originating from animals that did not come from Asia!) and the nervousness about the condition of U.S. banks had a slightly negative impact on financial markets in Asia this past week, the stock markets are still up by about 12% for the year – led by Indonesia (21.6%), Korea (11.8%), and China (9.4%).

Improving capacity building in post-conflict and fragile settings

Nina Vucenik's picture

Young children in school. Ghana. Photo: © Curt Carnemark / World BankThree African ministers shared their experience with Bank officials on Thursday when they met to discuss ways to develop capacity in post-conflict countries.

 “We are here to listen—tell us how we can better assist you. And please, be frank,” said Obiageli Ezekwesili, World Bank Africa Region Vice President.

Ezekwesili asked the ministers from Liberia, Rwanda and the Democratic Republic of Congo (DRC) to discuss capacity development efforts in their countries, and to identify what has and has not worked, and how donors can provide more effective support for human development, infrastructure, and public sector reforms.

Several common themes emerged from the ministers’ interventions, including:

  • Donors prioritizing support for primary and secondary education, and not higher education
  • Donors pressing a “one size fits all” approach on countries, trying to replicate programs that were successful elsewhere
  • The failure by expatriate advisors in civil service posts to transfer their knowledge and skills to local counterparts
  • Tension among returning members of the Diaspora and local populations that stayed behind, partly around incentive structures for civil service
  • An urgent need to deliver skills-training and create job opportunities for young ex-combatants
     

South Africa. Photo: Trevor Samson / World BankAugustine Ngafaun, Minister of Finance for Liberia, outlined the enormity of the challenges facing his country, which has “75 percent of the educational facilities destroyed” combined with a “massive brain drain” as a result of professionals fleeing during Liberia’s recent conflict.

“We have very few doctors, teachers and hardly any engineers,” said Ngafaun, Liberia's Minister of Finance.

He also noted that, despite the importance of the mining sector for Liberia’s growth, there are not even five geologists in the entire country.

Rwanda’s Finance Minister James Musoni noted that even though the reconstruction challenges were daunting, his country has made significant progress since the 1994 genocide. He said it is crucial for the donor community to understand the context in which each country operates, as in some cases the political leadership may not be ready.

Ezekwesili stressed the need to build confidence in all sectors, pointing out that “development solutions work only to the extent that the capacities of the nation-state, the private sector, and civil society are strong.”

“The lack of capacity is magnified by the stress of the post conflict environment,” Ezekwesili said. 

Story: Improving Capacity Building in Post-conflict and Fragile Settings—African Ministers Share their Experience

Indonesia's $100 billion budget: Is debt an issue?

Wolfgang Fengler's picture

I have received many encouraging responses to my first blog. Thank you. This time, let's look at Indonesia's budget. Last year, Indonesia's budget reached the magical threshold of US$100 billion.

Regional Finance Roundup – A look at Thailand after the ASEAN summit cancellation; updates on China, Singapore and Mongolia

James Seward's picture

In terms of big newsworthy events in Asia, one of the biggest has to be the anti-government protests in Thailand. A relatively small number of protesters dramatically caused the cancellation of an ASEAN+3 meeting held in Pattaya this past weekend where 10 regional heads of state were evacuated. The World Bank President, as well as the head of the IMF and UN, were turned around at the airport in Bangkok. Although the protests around the country have effectively ended after martial law was declared and two protesters died, the damage of this may be longer-lasting. Although a discussion of the politics would be interesting, let's concentrate on the finance-related issues.

Remittances and the Philippines' economy: the elephant in the room

Eric Le Borgne's picture

In the World Bank's latest semi-annual economic update for the East Asia and Pacific region, titled "Battling the Forces of Global Recession" and released today, we mentioned the Philippine economy's resilience, both in absolute and relative terms.

Seeing the financial crisis: What might contraction look like in Cambodia?

Stéphane Guimbert's picture

Declining revenue of tuk-tuk drivers in Cambodia shows even the informal sector isn't insulated.
Growth forecasts in Cambodia are generating a fair bit of confusion. Many simply question whether it is possible for GDP growth to be lower in 2009 than in the past 15 years.

The World Bank today launches its projection of a 1 percent contraction of the Cambodian economy. This is based on an analysis of available statistics and feedback from a range of economic actors. Yet, to most of my Cambodian friends, it remains hard to conceive.

It is true that "seeing" such a contraction will be difficult. Basically, what it means is that economic activity in 2009 will be pretty much the same as in 2008. So the fact that we continue to have traffic jams in Phnom Penh, see tourists at the Royal Palace, and hear construction machines in many residential areas is consistent with such a projection. What will change, though, is that incomes will not increase this year as fast as past years and it will also become more difficult for the 250,000 young people leaving school each year to find their first job. What also will be different is that with no growth in aggregate, there will be a proportion of those with a livelihood at the end of the year worse than at the beginning.

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