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Does Successful Development and Economic Transformation Require State Intervention in Industry and Technology?

Raj Nallari's picture

Proponents of state intervention argue that ‘market failures’ in information, coordination, credit and others necessitate ‘infant-industry protection’ and therefore an activist role for the government. For example, information about success or failure of new industries or technological adoption may be only available to investors and innovators and not shared with other entrepreneurs. Also, new industries and technologies require complementary human capital, and basic infrastructure among other things.

How Can South Asia Overcome its Infrastructure Deficit?

Ejaz Ghani's picture

Last week, I discussed the two very different South Asias and the need for regional cooperation to bring the lagging regions up to the standards of thriving regions. However, increased market integration by itself will not be sufficient to accelerate growth and benefit the lagging regions. South Asia suffers from a massive infrastructure deficit. Infrastructure is like second-nature geography, which can reduce the time and monetary costs to reach markets and thus overcome the limitations of physical geography.

Improved infrastructure that enhances connectivity and contributes to market integration is the best solution to promoting growth as well addressing rising inequality between regions. The Ganga Bridge in Bihar in India is a good example of second-nature geography. The bridge has reduced the time and monetary costs of farmers in the rural areas in north Bihar to reach markets in Patna, the largest city in Bihar. The Jamuna Bridge in Bangladesh is another good example of spatially connective infrastructure. The bridge has opened market access for producers in the lagging Northwest areas around the Rajshahi division. Better market access has helped farmers diversify into high value crops and reduced input prices.

South Asia suffers from three infrastructure deficits. First, there is a service deficit, as the region’s infrastructure has not been able to keep pace with a growing economy and population.

Launch update: World Investment and Political Risk

Mallory Saleson's picture

Just back from London where MIGA launched its new report, World Investment and Political Risk, and partnered with the Financial Times to host a symposium on Managing Global Political Risk.  The event was standing-room only, packed with experts from the political risk insurance industry. Debate was lively on the future for investing in emerging markets, managing global political risk in uncertain times, and whether investors are moving into a riskier world.

Pour que la terre tourne….aussi à Madagascar : Vers un agenda de relance économique

Jacques Morisset's picture

Le déclin économique à Madagascar s’inscrit dans la durée. Depuis 1980, il n’y a que 7 pays en développement qui ont reporté une croissance de leur revenu par habitant moindre que Madagascar. Cette performance traduit des insuffisantes criantes en matière de développement humain et en infrastructure ainsi que des retards technologiques, qui sont les moteurs de la croissance.

Madagascar Economic Policy Update

Noro Andriamihaja's picture

For the first time since the beginning of the crisis, the Government spent massively in October through a combination of debt-service and investment outlays. Over the next few months, the new Government is expected to face three daunting challenges with significant financial implications:

  • Organizing institutions and the electoral process (US$10-20 million for each election and an additional US$5-7 million per month to run the institutions)
  • Managing humanitarian vulnerability to climatic and external shocks (e.g.,US$40 recovery cost in 2007/2008)

How One Finalist Views DM2009

Tom Grubisich's picture

What did the DM2009 finalists think about the competition and how it might be improved?  Here's a mini-interview with Andrew Reitz, who was a DM2009 finalist from Ecuador.  Reitz is a rural enterprise specialist with Conservacion y Desarollo, whose project is a combination market/conservation approach to community agriculture that would help 100 indigenous and mestizo rural households in the Andes commercialize a native blueberry while reforesting the local ecosystem.   Reitz describes his project in this YouTube clip from the Development Markektplace Channel.
 
Q. What most impressed you about your week at the competition?

A. I was most impressed that the World Bank took the opportunity to reach out to the participants with some of the curriculum from the World Bank Institute.  These sessions touched base on some of the fundamentals to project management that, if applied correctly, will surely help participants achieve higher levels of success in future projects.   I also particularly enjoyed the panel discussion of past DM winners.
 
Q. What would you like to see added to future competition programs to help ensure that all finalists have the richest possible experience from their week?

A. I don't believe finalists were given enough time to properly present their projects to the jurors.   A half hour would have allowed for a proper question and answer period.  In addition, finalists need to be better prepped on the types of questions that jurists will ask.   The session on "selling your project/idea" was interesting; however, it would have been more beneficial if past jurors were involved.
 
Q. Should there be a bigger money pool so there can be more winners among the 100 finalists?

DM2009 Adaptation Theme Catches On Worldwide

Tom Grubisich's picture

The theme of DM2009 -- "Climate Adaptation" -- is looking very timely.  Today in the Washington Post there's a revealing Page One feature on how adaptation is catching on in countries around the world, with a special focus on what the Dutch, who have had centuries of experience coping with flooding, are doing to manage perhaps worse threats coming from climate change.

Most adaptation strategies assume the Earth will get hotter -- by at least 2 degrees C. no matter what countries do to mitigate the buildup of greenhouse gases.  Adaptation doesn't try to control climate, but to adjust to its destructive impacts, like flooding and drought.  The goals are to protect people and their community, including natural resources.

The frustration with DM2009 wasn't its mission, but that there wasn't enough money to fund all the worthwhile adaptation projects that made it to the finals.  The nearly US$5 million pool funded 26 projects.  But at least some jurors thought there were many more worthy projects.  After all, the 100 finalists had survived a screeening that eliminated 94 percent of applicant projects.

The post-competition challenge is how non-winners can stay alive.  Twenty-two of the projects aim to bring help to Least Developed Countries (LDCs), those which stand to be the biggest losers from climate change, like Bangladesh in South Asia, Nepal (photo of Nepalese villager by Simone D. McCourtie, World Bank) in East Asia and the Pacific, and Mozambique and many other countries in Sub-Saharan Africa.  To improve their chances, LDC project sponsors should make an all-out effort to be included in their countries' National Adaptation Programs of Action.  Most of the world's 49 LDCs have produced NAPAs as a key step toward getting funding for their adaptation efforts from developed countries.  While the LDC Fund contains only US$172 million -- hardly enough for adaptation projects in 49 countries -- the amount is likely to be increased as a result the U.N.-sponsored climate change negotiations that begin in Copenhagen on Monday.  Furthermore, the World Bank's Pilot Program for Climate Resilience (PPCR) has US$546 million to help finance NAPA adaptation projects of LDCs that are in the pilot.  So far, PPCR includes six LDCs.  Thirteen of the non-winning DM2009 finalists come from four of those six pilot countries (Bangladesh, Cambodia, Mozambique, and Nepal). 

The 22 non-winning DM2009 finalists from LDC countries can make strong cases for inclusion in NAPAs.  First, they have already been closely scrutinized by evaluators.  Second, these early-stage projects are minimally expensive -- none would cost more than US$200,000.  Third, they meet the top NAPA "guiding element" of local focus because they're strongly community-based.  Fourth, they were designed to be replicated.  And fifth, their specific objectives dovetail with the more general ones of their countries' NAPAs.

There's a common message for all those finalists: Go for it.

Integrating the Two South Asias

Ejaz Ghani's picture

Regional Cooperation can be the key instrument to promote increased market integration in South Asia through greater flow of goods, services, capital, and ideas. This is appropriate for a region which is the least integrated region in the world, although many countries share analogous cultures and histories, as well as a passion for cricket and curry.

It is also very timely given the global downturn and the slowdown in global trade. Increased regional trade could more than compensate for the potential loss in global trade. It is estimated that increased intra-regional trade could add two percentage points to South Asia's GDP growth. This could raise South Asia's real GDP growth from 6% to 8% in 2010. Unlike fiscal stimulus, increased market integration and regional trade could add to GDP growth, without increasing public debt. It is the most efficient and cost effective instrument for South Asia to cope with the global downturn.

Indigenous Knowledge +Science and Technology = DM2009 Winners

Tom Grubisich's picture

Nine DM2009 winners will use the centuries-old knowledge of Indigenous Peoples to adapt to destructive climate change -- but often leveraged with modern science and technology.

Here's how old and new will be joined in several winning projects in Latin America:

  • Peru -- Agricultural production in four communities in the Amazonian Basin (total population: 1,500) will be better managed through a combination of ancestral knowledge of the Basin and biomathematical computer simulation model and geographic information system (GIS)-based "micro-zoning" of the communities' ecology and economics. 
  • Colombia -- Traditional knowledge, aided by GIS and the sciences of ecology and biology, will be used to protect 207,000 hectares of native forest for a combination of conservation, housing, hunting, fishing, and gathering, traditional farming, and preservation of sacred places for community rituals. 
  • Costa Rica -- Ancient knowledge of adjacent valley and mountain ecosystems will be rescued and melded with mapping and other technology to help valley inhabitants of Bajo Chirripo to better cope with flooding caused by storms whose frequency and intensity are expected to increase with climate change, and to improve their present subsistence income. 
  • Peru -- Indigenous knowledge systems on how to adapt the native potato to changing climate will be combined with modern plant breeding to help communities in Potato Park in the High Andes to adapt to rapid climate change with weather-resilient plantings. 

 

Most of the finalist and winning projects that would help Indigenous Peoples were based in countries in Latin America and the Caribbean, where the intellectual property rights of indigenous communities against "biopiracy" and related theft have won more legal protection -- a clear signal for what needs to be done in other regions to protect indigenous rights.

Poor People's Knowledge: Promoting Intellectual Property in Developing Countries
, edited by J. Michael Finger and Philip Schuler (2004, World Bank and Oxford University Press), is a detailed primer on the issue, including an examination of the controversial World Trade Organization (WTO)-administered Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), which indigenous communities say is unfair to them.


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