Infrastructure bottlenecks have created seemingly perpetual traffic jams in and around São Paulo. Photo credit: Marcelo Camargo/ABr.
There’s a lot of time for innovative thought when you’re stuck in traffic in São Paulo.
Perhaps that’s why, in the words for Deborah L. Wetzel, World Bank Country Director for Brazil, “São Paulo has continuously innovated to overcome its infrastructure bottlenecks, often becoming a model to other states in Brazil.”
With a loan signed last month between the state and Banco Santander, and insured by the Multilateral Investment Guarantee Agency (MIGA), the state is at the vanguard of infrastructure financing.
Forty-one million people use the state’s transportation networks. While the network is one of the most developed and modern in Brazil, it is still insufficient for the state’s needs.
The State of São Paulo has sought to address the situation for some time, and the World Bank has played an important role through lending and technical assistance. An important component of this work is the São Paulo State Sustainable Transport Project that aims to rehabilitate roads in several key corridors and to reconstruct two bridges.
Yet, with a total cost estimated at $729 million, this project has faced a major financing hurdle. In September 2013, the World Bank approved a $300-million loan toward the initiative. But with growing demand for loans from Brazil’s poorest states, the bank was unable to commit additional funds. The State of São Paulo itself committed $129 million. That left a shortfall of $300 million.
How was the state going to mobilize these funds at a cost that would be acceptable to taxpayers?
A partnership with MIGA was a natural answer. In addition to political risk insurance, MIGA provides credit-enhancement products that protect commercial lenders against non-payment by a sovereign, sub-sovereign or state-owned enterprise.
In an unprecedented move, the State of São Paulo bid out the project to commercial banks with a requirement that their loans be backed by MIGA’s credit-enhancement instrument.
The result: MIGA issued guarantees to Banco Santander on a $300-million loan. With MIGA’s credit enhancement, the cost of the commercial loan was lower, and the length of the loan was longer, than São Paulo could have achieved on its own. The additional financing will be used to increase the scope of the project’s activities.
Despite its relevance to the broader economy of states, there exists little empirical information on the culture of the banking industry. Identifying the effects of business culture poses several challenges because comparing employees in one sector to those in another can be misleading. Some professions may naturally attract different kinds of people, making it tricky to separate cultural factors from individual ones. Moreover, the financial industry is broad and comprised of many different kinds of businesses and institutions, with some more focused on the consumer and others more focused on fiscal details.
Attempting to shed light on the subject, academics from the University of Zurich designed an experiment inspired by the economic theory of identity. Identity economics states that economic choices are not only based on personal taste but also on what an individual considers to be appropriate. Whether a choice is appropriate or not depends on a person’s social identity– their sexual orientation, race, religion, occupation, or where they live.
In the experiment, 128 employees from an international bank, with an average of 11.6 years of experience in the financial sector, were split into two groups. About half of the participants worked in a core business unit, like private banking, asset management, trading, or investment management. The other half worked in support units like human resources or administration. They were randomly assigned to a treatment or control group.
Base Erosion and Profit Shifting (BEPS) is a global problem which requires global solutions. BEPS refers to tax planning strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where there is little or no economic activity, resulting in significant savings in corporate taxes. BEPS is of major significance for developing countries due to their heavy reliance on corporate income tax, particularly from multinational enterprises (MNEs).
On October 10th 2014, nearly 60 top ministry of finance and tax administration officials from all over the world gathered in Santiago de Compostela, Spain, for a workshop on tax base erosion and profit shifting and Automatic Exchange of Information (AEOI). The workshop was co-organized by CIAT, GIZ, OECD and the World Bank Group.
Extreme natural events have affected more than 9.2 million people in the Pacific since 1950 and caused associated damage of about US$3.2 billion. From 2012 to 2014, the region experienced several disasters: two severe floods in Fiji, Tropical Cyclone Evan in Samoa, a magnitude 8.0 earthquake and subsequent tsunami in the Solomon Islands, Tropical Cyclone Lusi in Vanuatu, Tropical Cyclone Ian in Tonga, and a storm surge in the Marshall Islands (see figure 1). Pacific Island Countries (PICs) face critical challenges to attain financial resilience against such disasters. Many PIC Governments have a narrow revenue base, are net importers, and rely on aid as an income stream. This can limit their post-disaster financing options and place constraints on the national budget. Alternatives—such as risk transfers—could be used to reduce the drain on limited public funds.
Whenever aid and development money is involved, one question consistently emerges: How do you make sure it does not fall on the wrong hands, and be victims of fraud and corruption? This is a question that the World Bank country team in Vietnam and elsewhere has been grappling with. How do we ensure that financing for World Bank projects actually goes to its intended purposes and supports the ultimate goals of eliminating extreme poverty and boosting shared prosperity?
World Bank country staff in Vietnam realized that previous responses to fraud and corruption have focused too narrowly on individual projects. What are the factors that cause and perpetuate fraud and corruption in the first place? They needed to sufficiently address the root causes of the problem, and not just the symptoms. Despite greater awareness and more open debate about corruption in Vietnamese society, there's no evidence that allegations of fraud and corruption have decreased in the last several years.
To nip the canker in the bud, the Vietnam country team is developing a Strategic Action Plan to Address Fraud and Corruption Risks. The plan identifies broad areas of fraud and corruption concerns, categorizes them, and proposes measures and activities for mitigation. Teams across different World Bank units called “Global Practices” have come together to mainstream and implement the plan into core operations.
At the recent “New Directions in Governance” meeting it was suggested that future meetings should bring governance advisors together with sector-specific colleagues. The different language we use in our respective disciplines is a serious barrier to taking forward an agenda of real importance and hence this message seemed particularly pertinent. I came to the meeting with a number of thoughts on how public finance management (PFM) rules often hinder health system performance, some of which I outline below.
Over the past three decades a major focus in low- and middle-income countries has been to seek new revenue sources for health services to overcome strict controls over the use of budget funds which were seen as inefficient but difficult to address. Community-based health insurance schemes have been widely introduced, as were patient user charges and payroll tax-funded social health insurance schemes. These various developments reflected a belief that governments were unlikely to increase funding to health, or to introduce the flexibility in budget funds required to incentivize improvements in service delivery.
Emerging market multinationals (EMMs) have become increasingly salient players in global markets. In 2013, one out of every three dollars invested abroad originated from multinationals in emerging economies.
Up until now, we have had a limited understanding of the characteristics, motivations, and strategies of these firms. Why do EMMs decide to invest abroad? In which markets do they concentrate their investments and why? And how do their strategies and needs compare to those of traditional multinationals from developed countries?
In a book we will launch tomorrow at the World Bank, “New Voices in Investment,” we address these questions using a World Bank and UNIDO-funded survey of 713 firms from four emerging economies: Brazil, India, Korea, and South Africa.
- Emerging Markets
- Emerging Economies
- cross-border investment
- foreign direct investment
- Public Sector and Governance
- Private Sector Development
- Law and Regulation
- Global Economy
- Financial Sector
- The World Region
- South Asia
- Middle East and North Africa
- Latin America & Caribbean
- Europe and Central Asia
- East Asia and Pacific
For many people, "the cloud" is a nebulous term, but it simply refers to software and services that operate on the Internet instead of directly on a computer. Dropbox, Netflix, Flickr, Google Drive, and Microsoft Office 365 (a/k/a Outlook) are all cloud services-- they do not need to be installed on a computer.
According to a report by Gartner, one third of digital data will be in the cloud by 2016. Cloud computing is an attractive option for many entrepreneurs, businesses, and governments in developing countries that seek to service large populations but which require an alternative to heavy ICT infrastructure. Moreover, as mobile apps and PC software are increasingly tied to the cloud, its adoption is likely to increase.