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Financial Sector

G20 Summit’s Commitment to Action Will Help Promote Financial Inclusion

Amid the chronic chasm between the world’s wealthy and its excluded, almost half of the adult population worldwide – an estimated 2.5 billion people – lack access to basic financial services. The global economic crisis has intensified the plight of the financially excluded, preventing even more of the world’s poor from gaining a foothold on an important ladder out of poverty.

 

Rio +20: A Global Stage

Rachel Kyte's picture

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Earth Summit 1992. UN Photo/Michos Tzovaras
Photo: The scene at the 1992 Earth Summit in Rio de Janeiro, where the conference adopted the Rio Declaration on Environment and Development and the Agenda 21 programme of action, among other actions. UN Photo/Michos Tzovaras.


This week, the city of Rio de Janeiro will become a global stage, home to tens of thousands of people attending the UN Conference on Sustainable Development.

Rio+ 20 is an important global stage upon which those committed to action from government, the private sector, and society can show how they plan to demonstrate that we can accelerate progress, if we change the way we grow.

We need a different kind of growth, a greener and more inclusive growth. We think it is affordable with help to those for whom upfront costs may be prohibitive. We think we should be able to value natural resources differently within our economic model. We think that with the right data and evidence we can avoid the irreversible costs of making wrong decisions now. And we can have economic systems that are much more efficient.

Do small countries do it better?

Apurva Sanghi's picture

In development circles, people talk about “countries that are too big to fail and too small to succeed”.  The jury may be out on the former but a new book by Shahid Yusuf and Kaoru Nabeshima, “Some Small Countries Do It Better” dispels the notion that countries can be too small to succeed.

Three small countries studied in the book - SIFIRE (SIngapore, FInland, IREland) – not only grew at high rates but were able to sustain them.

The book – which concludes with a section on implications for African countries – contends that growth recipes for SIFIRE were not tightly bound to the East Asian model of extremely high rates of savings and investment (although arguably, Singapore was in many ways the epitome of that model, thanks to its mandatory savings scheme which led to gross national savings in the neighborhood of 50 percent for decades).

The larger point is that these three countries augmented physical investment with healthy doses human capital and knowledge; by “opening their windows and letting it [knowledge in various forms, for example, that embodied in FDI] stream in”. And even though the book does not explicitly discuss it, they did so without massive infusions of foreign aid. Or perhaps it was the lack of aid that forced them to be nimble, agile, and forward-looking?

What precisely did SIFIRE get right? 

Join Us for a Live Chat about Rio+20 on World Environment Day

Rachel Kyte's picture

Credit: Henrique Vicente, Creative Commons

On June 5, World Bank Vice President for Sustainable Development Rachel Kyte will host a live online chat about Rio +20 and sustainable development at live.worldbank.org. Submit questions now, and then join Rachel Kyte and economist Marianne Fay on June 5 at 14:00 GMT/10 a.m. EDT.
 

Rio +20 is coming up in a few weeks. Some 75,000 leaders, advocates, scientists and other experts are expected in person, and tens of thousands more will be watching online to see how the world can advance sustainable development.

Many of us have been advocating for greener, more inclusive growth since before the first Earth Summit at Rio 20 years ago. We’ve seen economic growth lift 660 million people out of poverty, but we’ve also seen growth patterns run roughshod over the environment, diminishing the capacity of the planet’s natural resources to meet the needs of future generations.

The growing global population needs world leaders to do more than just check in at the UN Conference on Sustainable Development, Rio+20 – it needs them to move the needle now toward truly sustainable development practices.

Can Kenya replicate Indonesia’s turnaround?

Wolfgang Fengler's picture

JakartaRecently, a friend from Indonesia visited me in Nairobi. He is one of the world’s leading experts on social development and a long-term Jakarta resident. One of his observations stuck in my mind: “Kenya is just like Indonesia ten years ago”, he said. 

Comparing Kenya with Indonesia is counterintuitive—except perhaps when it comes to traffic jams—because of the many differences between the two countries. Indonesia is the world largest island state with more than 17.000 islands and a demographic heavyweight with 240 million people (six times more than Kenya). It is also 85 percent Muslim, while Kenya is about 85 percent Christian. Indonesia has massive natural resources – coal and gas (and some oil) – that it exports to other Asian countries, especially China, while Kenya’s economy is fuelled by a strong service sector.

There are many more reasons to challenge a comparison between these two countries but when one digs below the surface, there are also some similarities. Economically my friend was spot on: in GDP per capita terms, Kenya is roughly at the level of Indonesia a decade ago (about US$800 per capita). Today Indonesia is far ahead, but I don’t see any reason why Kenya couldn’t follow suit. Indeed, Indonesia is a good benchmark case for Kenya because it was never a “star reformer”, but instead a consistently strong performer.

Do Business Regulatory Reforms Impact Economic Growth?

Jamal Ibrahim Haidar's picture

It takes an entrepreneur 28 days to start a business in Spain but only 1 day to do so in New Zealand. The total business tax rate (including profit tax and labor tax) is 28.1% in Bulgaria but 68.5% in Italy. And, fixed-term labor contracts are prohibited for permanent tasks in France and Portugal but not in Germany and Sweden.

The World Bank has been publishing the annual Doing Business reports since 2004 to investigate the scope and manner of regulations that enhance business activity and those that constrain it. In a new research paper (Haidar 2012), we investigate the link between business regulatory reforms and economic growth in 172 countries.

In the course of our research, we created a five year dataset on business regulatory reforms from the World Bank’s Doing Business project. Then, we tested the hypothesis that business regulatory reforms increase economic growth, using data on micro-economic reforms. The results provide robust support for the claim that business regulatory reforms are good for economic growth. We establish that, on average, each business regulatory reform is associated with a 0.15 percent increase in growth rate of GDP. The below figure provides a visual illustration of the main empirical finding.
 
Source: Haidar (2012)

Your thoughts on Brazil-Africa partnerships

Susana Carrillo's picture

Brazil and Sub Saharan Africa: Partnering for GrowthOn June 5, the World Bank will host an event focused on the ongoing relationship between Brazil and countries in Sub-Saharan Africa. The event will be web streamed. Panelists will discuss Brazil’s experiences in the areas of agriculture, social protection and vocational training, and ways in which African countries can benefit.

Ahead of the event, we’re seeking your questions and comments. Please read the recently launched report Bridging the Atlantic: Brazil and Sub-Saharan Africa Partnering for Growth. The report highlights these key points:


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