Continuing with our series looking at the 25 year partnership between Mongolia and the World Bank, today we look at 2008, a year that will be remembered by many Mongolians for events both high and low. The low point was the riot that followed parliamentary elections on 1st July, 2008. Five innocent lives were lost and Ulaanbaatar city was under a state emergency for two days and three nights. While Mongolia is rightfully praised for its peaceful transition from one regime to another in 1990, this incident of 2008 will be remembered as the darkest time in the 25 years of democracy.
The high of 2008 occurred after this riot when Mr. Tuvshinbayr Naidan brought home Mongolia’s 1st ever gold medal from the Beijing summer Olympics. I will never forget the sight of people waving our national flag, gathering in the Central Square and cheering with exhilaration. The World Bank’s Country Director, David Dollar, also celebrated this historic occasion, noting that “The event was important enough to get rival political parties to shake hands and share the pride.”
This blog was previously published in The World Post.
Talk about ‘growth’ in Latin America has become less upbeat today than a few years ago. That’s no surprise. For over a decade, average growth meant at least double the economic activity that we are seeing today.
Technological content of India’s exports
The evolution of Indian exports has not followed a “textbook” pattern. The pattern of evolution points to a dichotomy in the Indian economy – a well integrated, technologically advanced services sector and a relatively lagging manufacturing sector. The share of service exports in total exports has grown to over 32 percent in 2013 from 28 percent in 2000. On the other hand, the share of manufacturing exports in total export has declined to 67 percent from nearly 80 percent during 1990-2013.
The growth in service exports has been more rapid, resulting in the share of services exports in total exports to increase rapidly over the last decade. This can be explained by technological changes. Many services do not require face-to-face interaction, and can be stored and traded digitally. These services are called modern services. Modern services are the fastest growing sector of the global economy. This is particularly evident in India, where modern services exports account for nearly 70 percent of the total commercial services exports (compared to around 35 percent in EMs) (see Figure 1).
Natural resources management, particularly in the extractives industry, can make a meaningful contribution to a country’s economic growth when it leads to linkages to the broader economy. To maximize the economic benefits of extractives, the sector needs to broaden its use of non-mining goods and services and policymakers need to ensure that the sectors infrastructure needs are closely aligned with those of the country’s development plans.
In Africa, especially, mining and other companies that handle natural resources traditionally provide their own power, railways, roads, and services to run their operations. This “enclave” approach to infrastructure development is not always aligned with national infrastructure development plans.
When development practitioners such as ourselves think of poverty, the EU is not what comes to mind first. While it is true that average incomes are higher in Europe than in most regions of the world, it is also true that the 2008 global financial crisis had a huge impact on the welfare of the most vulnerable in many countries in the region.
Nearly 50 years ago, books such as Asian Drama: An Inquiry Into The Poverty Of Nations, by the Swedish economist and Nobel laureate Gunnar Myrdal, offered a dire prediction of famine and poverty for the region in coming decades.
The World Bank Group’s Enterprise Surveys benchmark the business environment based on actual experiences of firms. In a new blog series we kicked off last week, we’re sharing these findings from recently analyzed surveys conducted through extensive face-to-face interviews with managers and owners of firms in several countries.
In this post we focus on Afghanistan. We’ve conducted a survey with 410 firms across five regions and four business sectors—manufacturing, construction, retail, and services.
The International Monetary Fund (IMF) has noted that considerable political and security uncertainties have posed challenges for Afghanistan. Furthermore, the financial sector has been vulnerable with eight out of 15 banks classified as weak in late 2014. Within this context, the Afghanistan Enterprise Surveys (ES) shed light on several interesting findings:
Corruption is a challenge
According to the Afghanistan Enterprise Survey, firms face almost a 50 percent chance of having to pay a bribe if they applied for an electricity connection, tried to obtain permits, or met with government officials for tax purposes (“Bribery incidence”). This is more than double of what private firms in landlocked developing countries experience on average.
These are questions we’ve been seeking to answer at the World Bank Group. And we’ve developed a new visualization tool, accessible through our World Integrated Trade Solution database, which allows the public to explore the quantifiable reality of GVCs.
To give you an example of how it works, let’s look at the automotive sector—a very prominent and commonly discussed GVC.
Sturgeon and Memedovic developed a methodology to break down the automotive production chain into final goods—those purchased by the consumer—and intermediate goods—those purchased by other manufacturers as inputs to be used in their own production. They identify three main GVC ‘nodes’: Automotive components (made by suppliers); engines, transmissions, and body assemblies (made by automakers); and finished motor vehicles. Table 1 shows the main exporting country within each of these nodes and its relative market share within that node.
Table 2 goes one step further. By digging into the trade data, we can identify the most important products for each GVC node, in terms of their relative weight on world trade. This also helps us, in part, to identify which products or activities along the production chain are most significant or add the most value.
Perhaps not surprisingly, the most exchanged automotive input ‘made by suppliers’ in 2014 falls under the classification HS870899—‘parts and accessories.’ Now, to better understand exactly how these parts and accessories move along the GVC, we can use our Global Trade Network tool on WITS to map all of the bilateral trade flows for HS870899.