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Energy

The Decline in Oil Prices: An Opportunity

Ivailo Izvorski's picture

A decade of elevated oil prices brought prosperity to many developing countries. Incomes rose, poverty shrank, macroeconomic buffers were rebuilt. The fiscal space for investing more in education and infrastructure increased, resulting in better sharing of prosperity. At the same time, higher commodity prices and surging global demand resulted in much more concentrated exports in all developing oil-rich countries. "Diversifying exports" became a priority for policy makers and development economists around the world. Historical experience and evidence to the contrary from successful resource rich countries notwithstanding, many widely believe that a more diversified export structure should be an important national goal and may well be a synonym for development, a goal that government can target and achieve.  And a more diversified export structure typically meant a smaller share of commodity exports in total shipments abroad or a reduced concentration – as measured by the Herfindahl-Hirschmann index – of exports.

The Impact of Falling Oil Prices

Birgit Hansl's picture

 Notes from Russia and Kazakhstan

Petrol tanker driving along the rural road in Russia Oil prices tumbled dramatically since July when they reached US$115 per barrel to below US$65 per barrel in recent days. Despite the sharp price decline, OPEC signaled no intention to cut production.  The oil market remains well-supplied and there is demand-driven pressure on oil prices, following weak economic data from the Euro zone and a number of emerging economies, including Turkey, Brazil, Russia, and China which means that the oil price could fall even further and remain low for longer.

The economic prospects of many resource abundant economies are tied to oil prices. Russia and Kazakhstan are two extreme cases. Such dependency translates into volatility of export receipts and government revenues and, depending on the exchange regime, to a decline in the national currency. For Russia, oil and gas provide about 70 percent of its exports and 50 percent of its federal budget. In Kazakhstan, oil revenues constitute about half of government’s total revenues and 45 percent of foreign exchange earnings.

Lessons from Reducing Energy Subsidies

Mamta Murthi's picture

A view from Central Europe and the Baltics

Energy subsidies are common throughout the world.  The bulk of subsidies are paid in the Middle East and North Africa where my colleague, Shanta Devarajan, has eloquently blogged about their corrosive impact on economic growth, on employment, on human health and on water conservation.  Where I sit, in Central Europe, many countries are in the process of liberalizing their market for energy and bringing subsidies to an end.  What lessons does the experience of energy price liberation in this group of countries offer to their neighbors in the south?  Based on the work of my colleagues, Nistha Sinha and Caterina Ruggieri, I would draw five lessons.

Budget Rules for Resource Booms - and Busts

Shanta Devarajan's picture

Oil pumps The recent, precipitous decline in oil prices (35 percent so far this year) has revived the question of how oil-exporting countries should manage their budgets.  These countries’ governments rely on oil revenues for 60-90 percent of their spending.  In light of the price drop, should governments cut expenditures, including growth-promoting investment expenditures?  Or should they dip into the money they saved when oil prices were high, and keep expenditures on an even keel? Since oil prices fluctuate up and down, governments are looking for rules that guide expenditure decisions, rather than leaving it to the politicians in power at the time to decide whenever there is a price shock.  The successful experience of Norway and Chile, which used strict fiscal rules to make sure that resource windfalls are saved and not subject to the irresistible temptation to spend, is often contrasted with countries such as Nigeria and Cameroon, which didn’t.

Open India: New Interactive App Features State-level Sectoral Data

Vilas Mandlekar's picture
What is the World Bank Group (WBG) doing to help address India's development challenges? And how is the Bank doing in implementing its programs in India's low-income states?  These are some of the questions that are addressed via Open India (openindia.worldbankgroup.org), a new web-based app that lays out the WBG's Country Partnership Strategy (CPS), operational projects, and knowledge products in India.

What makes the Open India site unique?
This web app takes a new and different approach in presenting the WBG's partnership strategy and current projects, by doing so in a transparent, interactive, and easy-to-use web platform. It features data visualizations that connect the main engagement areas  ̶   Economic Integration, Spatial Transformation, and Social Inclusion  ̶   with the underlying challenges that are being addressed through the WBG's operations and knowledge products in India.  An essential component of the new Open India web app is sectoral data that quantifies India's development challenges. For example, the range of India's infrastructure and transportation gaps is presented as a data visualization below.
 

Source: Open India

A major African step to make sustainable transport a reality

Roger Gorham's picture
Promoting Sustainable Transport Across Africa

The term “sustainable transport” evokes a wide range of images and perceptions among transport professionals and lay people alike. For some, it means a range of technology solutions – from diesel particulate filters to ebikes, Copenhagen wheels, or buses running on compressed natural gas.  For others, the term can refer to changes in behavior, like improving the way vehicles are maintained or driven, or efforts to carpool.  For yet others, the term implies even more radical changes, like wholesale shifts in the way cities are designed, and/or smart city approaches that use ICT technologies to fundamentally change the way people interact with their surroundings. “Sustainable Transport” can mean any or all these things, including expanding access to transport services in rural areas. 
 
But however the term is interpreted, it is not normally associated with Africa.  Indeed, in many respects, common images of African transport are synonymous with unsustainability – high rates of traffic growth and congestion (even in cities with comparatively low motorization rates), high traffic injury and fatality rates from substandard road safety practices, highly polluting vehicles, minimal formal public transport services, poor enforcement of road worthiness and vehicle overloading– and the list could go on.  
 
It is then very telling that the inaugural conference of the Africa Sustainable Transport Forum took place in Nairobi, Kenya in late October, with not only a great deal of interest but also high-level participation (with delegates from 42 African countries, including 25 Ministers). The conference was hosted by the Kenyan government, with support from the World Bank-led Africa Transport Policy Program (SSATP) and the United Nations Environment Program (UNEP). The Ministerial portion of the conference was opened by both President Kenyatta and Secretary General Ban Ki Moon. 
 
Over three days, technical experts and ministers discussed what transport sustainability means for the continent, resulting in the first ever Sustainable Transport Action Framework for Africa. There were a number of other “firsts” associated with the conference: the first time African transport and environment ministers gathered together to discuss transport issues; the first time that “sustainability”, as a key objective of transport policy in Africa, was the focus of the agenda; and the first time that a Secretary General of the United Nations had ever opened an international conference focused on transport.

The Debate: Would the Arab World be better off without Energy Subsidies?

Will Stebbins's picture
The Debate

Governments in the Arab world have long subsidized the price of energy. This gives citizens throughout the region access to cheap petrol and diesel, and electricity supplied at below-market rates. But what has been the real impact of subsidies, and do they justify the huge financial burden they place on national budgets? This is a critical question in the Middle East and North Africa (MENA), as the region represents a disproportionate share of the world’s energy subsidies.

What can Laos teach us about organizational learning?

Naazneen Barma's picture
A collection of photos in the Champassak provincial office of Électricité du Laos shows the blue-shirted employees in action. Photo: Naazneen Barma/The World Bank
The hallways of the Électricité du Laos (EDL) provincial offices in Champassak Province are filled with posters bearing bar charts and diagrams illustrating the public utility’s remarkable success in delivering electricity to the country’s still heavily rural population.

It is easy to see that data is crucial to the agency’s operations. Sitting down with EDL’s employees and managers—all wearing the agency’s signature blue-shirt uniform with pride—it also becomes apparent that the science of numbers and the art of managing people have gone hand in hand at this agency. This combination has enabled EDL to make organizational learning a central pillar of the agency’s success.

Institutions Taking Root, a recent report of which I’m a co-author,  looked at nine successful institutions in fragile and conflict-affected states that share a core set of internal operational strategies. 

Corrosive Subsidies in MENA

Shanta Devarajan's picture

Air pollution in Cairo Half the world’s energy subsidies are in the Middle East and North Africa Region.  These subsidies have been criticized on grounds that they crowd out public spending on valuable items such as health, education and capital investment.  Egypt for instance spends seven times more on fuel subsidies than on health.  Furthermore, the allocation of these subsidies is heavily skewed towards the rich, who consume more fuel and energy than the poor.  In Yemen, the portion of fuel subsidies going to the richest quintile was 40 percent; the comparable figure in Jordan was 45 percent and in Egypt, 60 percent.
 


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