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.
A view from Central Europe and the Baltics
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.
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
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.
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.
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.
- Urban Development
- Social Development
- Private Sector Development
- Labor and Social Protection
- Global Economy
- Climate Change
- Agriculture and Rural Development
- East Asia and Pacific
- South Asia
- Sri Lanka
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.
What would you do if you won a billion dollars? Would you just buy more hamburgers for lunch or pick up some extra pairs of socks? Probably not. You would think bigger: maybe a boat, a mansion, a fancy car – luxury goods. Or you might try to make your life easier with a housekeeper, a driver, a chef – luxury services. This switch in the shopping list is so common that economists have a nerdy name for it: “non-homothetic” preferences. That is, people buy different things when they get more money.
It turns out that this dynamic is relevant for development, as we (Bill Battaile, Richard Chisik, and Harun Onder) found in “Services, Inequality, and the Dutch Disease,” a World Bank Policy Research Working Paper published this year. In particular, countries that see a rapid influx of income following a natural resource discovery – say oil or diamonds – are vulnerable to this pattern in a way that could hinder their overall chances of economic growth.
I’m on my way to the 7th South Asia Economic Summit (SAES) in New Delhi, India. The summit* brings together leading analysts, academics, policymakers, the private sector and civil society from across the region and beyond, who meet to suggest solutions to South Asia’s economic issues and learn from each other’s experiences.
This year’s SAES takes place at a very opportune time. Regional cooperation momentum has been on an upswing. The theme of the summit, “Towards South Asian Economic Union” captures the renewed optimism of moving forward on the regional agenda and generating shared prosperity. Apart from that, the SAES is held between November 7 – 8, only two weeks before the 18th SAARC (South Asian Association for Regional Cooperation) Summit, where heads of state from Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri-Lanka will meet in Kathmandu, Nepal.