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Reforms Sri Lanka needs to boost its economy

Idah Z. Pswarayi-Riddihough's picture
 Joe Qian/World Bank
The Colombo Stock Exchange. Credit: Joe Qian/World Bank

Many Sri Lankans understand the potential benefits of lowering trade costs and making their country more competitive in the global economy. The majority, however, fear increased competition, the unfair advantage of the private sector from abroad and limited skills and innovation to compete.

Yet, Sri Lanka’s aspirations cannot be realized in the current status quo.  

While changes in trade policies and regulations will undeniably improve the lives of most citizens, I’m mindful that some are likely to lose. However, many potential gainers of the reforms who are currently opposed to them are unaware of their benefits.

Implementing smart reforms means that government funds will be used more effectively for the people, improve access to better healthcare, education, basic infrastructure and provide Sri Lankans with opportunities to get more and better jobs. Let me focus on a few reforms that I believe are critical for the country.  First, Sri Lanka needs to seek growth opportunities and foreign investment beyond its borders.    

First, Sri Lanka needs to seek growth opportunities and foreign investment beyond its borders.

Experience shows that no country in the world today has been able to create opportunities for its population entirely within its own geographic boundaries. To succeed in this open environment, Sri Lanka will need to improve its skills base, better understand supply and demand chains as well as produce higher quality goods and services

Experience shows that no country in the world today has been able to create opportunities for its population entirely within its own geographic boundaries. To succeed in this open environment, Sri Lanka will need to improve its skills base, better understand supply and demand chains as well as produce higher quality goods and services.

Campaign Art: Become a citizen of the Trash Isles

Roxanne Bauer's picture
People, Spaces, Deliberation bloggers present exceptional campaign art from all over the world. These examples are meant to inspire.

Many of us have seen the iconic photograph of a seahorse latched onto a cotton swab. It’s just one example of how prevalent plastic debris is in the ocean.

Every year, hundreds of tons of plastic trash enters the ocean, splintering into smaller and smaller pieces that are often eaten by marine animals and birds. The plastic trash is everywhere It’s in sediments at the bottom of the ocean, it floats at the surface, is washed up on remote islands, and is even frozen inside Arctic iceSome estimates say that by 2050, there could be more plastic than fish in the sea.

Now, there’s a gigantic mass of plastic waste the size of France floating in the Pacific Ocean. To call attention to it, the environmental charity Plastic Oceans Foundation paired up with news and entertainment publication LADBible and TV presenter Ross Kemp to campaign to have the giant mass of trash officially recognized by the UN as a country with its own citizens, currency, flag, passport and stamps.

LADBible has called this emerging nation The Trash Isles.

Al Gore, who won the Nobel Peace Prize jointly with the Intergovernmental Panel on Climate Change in 2007, is now the nation's first honorary citizen, and the Isles submitted an application to the United Nations to be recognized as the world’s 196th country.

The campaign also has a call to action, issued as The Trash Isles Manifesto:
  • Develop biodegradable materials
  • Introduce the carbon tax
  • Create laws to increase recycling

You can join the more than 100,000 people who have already signed the petition to be granted citizenship become a Trash Isles citizen.

How Islamic finance is helping fuel Malaysia’s green growth

Victoria Kwakwa's picture
Photo: bigstock/ f9photos

Income growth is not the sole aim of economic development. An equally important, albeit harder to quantify objective is a sense of progress for the entire community, and a confidence that prosperity is sustainable and shared equitably across society for the long term.  

How does Bhutan’s Economy Look?

Tenzin Lhaden's picture
Bhutan Economic Update
Bhutan has maintained solid economic performance to date in 2017 but delays in hydropower construction may affect its economic outlook with growth expected to slow to just under 7 percent in 2018. 

Bhutan is one of the smallest, but fastest-growing economies in the world. Its annual economic growth of 7.5 percent on average between 2006 and 2015, placed the country 13th of 118 countries, compared to the average global growth rate of 4.4 percent.

This growth has been shared by a majority of Bhutanese, with extreme poverty dropping from 25 percent in 2003 to 2 percent in 2012, based on the international poverty line of $1.90 a day (at purchasing power parity). This is among the rate in South Asia and compares favourably to the regional poverty rate of 19 percent. Equally impressive improvements were made in access to basic services such as health, education and asset ownership.

The recent developments on strong lending growth, inflation, exchange rates and international reserves show that Bhutan maintains a solid and stable growth in the first half of 2017. Gross international reserves have been increasing since 2012, when the country experienced an Indian rupee shortage. Reserves exceed $1 billion, equivalent to 10 months of imports of goods and services in mid-2017 which makes the country more resilient to potential shocks. This is also very much in line with the requirement spelled in the 2008 Constitution which outlines minimum reserve requirements. The Bhutanese ngultrum, pegged to the Indian rupee, have been stable or slightly appreciating against the U.S. dollar.

Despite recent solid growth and macroeconomic stability, we need to carefully monitor its Development. According to the latest Bhutan Economic Update, the hydropower construction and the implementation of the 2016 Economic Development Policy are expected to support this solid growth during the next few years. However, with confirmed delays in the completion of two hydropower projects, the contribution of the hydropower sector to growth will be lower than the originally projected. Therefore, the World Bank revised down its growth forecasts in 2019/20 by a few percentage points to 7.6 percent, still among the fastest in the world.

Introducing Data360R — data to the power of R

Reg Onglao's picture
 

Last January 2017, the World Bank launched TCdata360 (tcdata360.worldbank.org/), a new open data platform that features more than 2,000 trade and competitiveness indicators from 40+ data sources inside and outside the World Bank Group. Users of the website can compare countries, download raw data, create and share data visualizations on social media, get country snapshots and thematic reports, read data stories, connect through an application programming interface (API), and more.

How can digital technology transform lives and improve opportunities in Bhutan?

Yoichiro Ishihara's picture
Tech Park
The recently opened Thimphu tech park – Bhutan’s first IT park -

The Kingdom of Bhutan is a landlocked country located high in the eastern Himalayan mountain range with its population 760,000. Up until about 20 years ago, the country was isolated from the world; Bhutan’s first ever television broadcast occurred in 1999. Since then, information communications technology (ICT) has made rapid advancement. Mobile subscriptions increased from 0.4 per 100 people in 2003 to 87 in 2015. The proportion of people using the internet have increased from 0.1% in 1999 to 40% in 2015. Today, all 20 districts and 201 (out of 205) sub-districts are connected through fiber optic cables.

The World Bank’s 2016 World Development Report on “
Digital Dividends” argues that digital technologies have boosted growth, expanded opportunities, and improved service delivery. Use of ICT for development is especially applicable to small states with populations of less than 1.5 million. Another report, “World Bank Group Engagement with Small States” finds that ICT investments can help reduce economic isolation, lessen barriers to trade, promote tourism, and improve mobility. These messages are highly relevant to Bhutan today.

The Government has enthusiastically adopted the use ICT to improve its services to its citizens as described in Bhutan ICT Roadmap and Bhutan E-Government Masterplan. The Government to Citizen (G2C) program, launched in 2005, provides a one-stop-shop for more than 100 services such as procuring a passport. The national ePayment Gateway Infrastructure, established by the Royal Monetary Authority (RMA), the central bank, has enabled citizens to pay for some public services online. Recently, the National Land Commission (NLC) launched eCitizen Portal - an online one-stop shop for transferring property titles online. This has reduced the number of days to transfer ownership of a property from 90 days to 62 days in the capital, Thimphu. More importantly, the NLC is reaching out to the private sector to seek feedback on how to improve its usability by piloting a feedback survey using an Interactive Voice Response (IVR) tool for the first time in Bhutan. The government has also introduced an electronic government procurement system (e-GP) to make optimal use of resources. Given the size of the budget (exceeding 30 percent of GDP), the adoption of e-GP will contribute to effective use of public resources. The World Bank Group has been supporting these efforts through various instruments such as the second Development Policy Credit: Fiscal Sustainability and Investment Climate, which helped get the eCitizen Portal off the ground.

The forgotten dimension of the SDG indicators – Social Capital

Jos Verbeek's picture

The 2030 Agenda for Sustainable Development rightfully points out that sustainability has three dimensions: economic, environmental, and social. The first two are well understood and well measured.
 
Economic sustainability has a whole strand of literature and the World Bank and IMF devote a lot of attention to debt and fiscal sustainability in their reports. Just open any Article 4 consultation or any public expenditure review and you will find some form of fiscal or debt sustainability analysis.
 
The same can be said about environmental sustainability. Since Cancun (COP16), countries prepare National Adaptation Plans, and since COP 21, they have prepared Nationally Determined Contributions (NDCs) which focus on domestic mitigation measures to address climate change. 

The growing economic clout of the biggest emerging markets in five charts

Ayhan Kose's picture

Global economic growth is accelerating. After registering the slowest pace since the 2007-2009 financial crisis in 2016, global growth is expected to rise to a 2.7 percent pace this year and 2.9 percent over 2018-19.

While much has been said about better economic news from the major advanced economies, the seven largest emerging market economies—call them the Emerging Market Seven, or EM7 – have been the main drivers of this anticipated pickup.

Chart 1:

The contribution of the seven largest emerging market economies to global output has climbed substantially over the last quarter century.

The EM7 -- Brazil, China, India, Indonesia, Mexico, Russia and Turkey – accounted for 24 percent of global economic output over 2010-2016, up from 14 percent in 1990s. Although this is a smaller share than the Group of Seven major industrialized economies, the G7’s portion of global economic output has narrowed to 48 percent from 60 percent over the same time frame.
 

Contribution to global output (percent)

How much should Bhutan worry about debt?

Yoichiro Ishihara's picture
Bhutan hydropower
Construction of the Dagachhu Hydropower Plant in Bhutan. Photo Credit: Asian Development Bank

In many respects, Bhutan has been a development success story. Its people have benefitted from decades of sharp reductions in poverty combined with impressive improvements in health and education. The country is a global model in environmental conservation. It is the first carbon negative country; Bhutan’s forests, which cover over 70% of the country, absorb more carbon dioxide than is produced by its emissions.

The Kingdom of Happiness also must grapple with the reality of managing budgets, creating infrastructure, and preparing its citizens to be able to create and take advantage of jobs of the future. To do that, we are working with closely with Bhutan to build the foundations for a more prosperous future through the cultivation of a vibrant private sector economy and supporting green development.

At the same time, Bhutan has invested generously in hydropower energy production to create a reliable and lasting source of green energy for its people. It also benefits from exporting excess electricity to neighboring India, whose energy needs continue to increase at a rapid pace with their growing economy.

In large part due to the hydropower investments, Bhutan’s public debt was 107 percent of the Gross Domestic Product (GDP) as of March 2017. Hydropower external debt was at 77 percent of GDP with non-hydropower external debt accounting for 22 percent of GDP. Questions have arisen on whether this level of debt is sustainable and what should be done to address it.


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