Syndicate content

Governance

‘Smartest Places’ via smarter strategies: Sharpening competitiveness requires ingenuity, not inertia

Christopher Colford's picture

Seeking an antidote to the gloom-and-doom bombast of this election year? Try a dose of optimism about urban“hotspot hustle and cutting-edge cool” – with a book that champions smart public policy, delivered through a shrewd approach to Competitiveness Strategy.

Gazing into the rear-view mirror is a mighty reckless way to try to drive an economy forward. Yet backward-looking nostalgia for a supposedly safer economic past – with voters' anxiety being stoked by snide sloganeering about “taking back our sovereignty” and “making the country great again” – has infected the policy debate throughout this dispiriting election year, in many of the world’s advanced economies. Scapegoating globalization and inflaming fears of job losses and wage stagnation, populists have harangued all too many voters into a state of passivity, lamenting the loss of a long-ago era (if ever it actually existed) when inward-looking economies were, allegedly, insulated from global competition.


Optimism has been in short supply lately, but an energetic new book – co-authored by a prominent World Bank Group alumnus – offers a hopeful perspective on how imaginative economies can become pacesetters in the fast-forward Knowledge Economy. Advanced industries are thriving and productivity is strengthening, argue Antoine Van Agtmael and Fred Bakker, now that many once-declining manufacturing regions have reinvented their industries and reawakened their entrepreneurial energies.

Welcome to the brainbelt,” declares “The Smartest Places On Earth: Why Rustbelts Are the Emerging Hotspots of Global Innovation” (published by Public Affairs books). Now that brainpower has replaced muscle-power as the basis of prosperity in an ever-more-competitive global economy, the key factor for success is "the sharing of knowledge." Longlisted for the Financial Times/McKinsey Business Book of the Year Award, “Smartest Places” is receiving well-deserved attention among corporate leaders and financial strategists – and it ought to be required reading for every would-be policymaker.

The era of “making things smart” has replaced the era of “making things cheap” – meaning that industries no longer face a “race to the bottom” of competing on costs but a “race to the top” of competing on creativity. Knowledge-intensive industries, and the innovation ecosystems that generate them, create the “Smartest Places” that combine hotspot hustle and cutting-edge cool.





Those optimistic themes may sound unusual to election-year audiences in struggling regions, which are easy prey for demagogues manipulating populist fears. Yet those ideas are certainly familiar to readers at the World Bank Group, where teams working on innovation, entrepreneurship and competitiveness have long helped their clients shape innovation ecosystems through well-targeted policy interventions that strengthen growth and job creation.

“Smartest Places,” it strikes me, reads like an evidence-filled validation of the Bank Group’s recent research on “Competitive Cities for Jobs and Growth.” That report, published last year, offers policymakers (especially at the city and metropolitan levels) an array of practical and proven steps that can help jump-start job creation by spurring productivity growth.

Grievance Redress Mechanism: A case of Nepal’s Hello Sarkar

Deepa Rai's picture

A section of a footpath is swept away by landslide near the international airport in Kathmandu, Nepal. The roads are slippery and difficult to walk on or even drive due to potholes and delayed maintenance in the valley. These are just few difficulties that I endure during my everyday commute, but what do I actually do about it? I complain about it with my friends, we all nod in agreement and we get on with our everyday chores.

Pranish Thapa, on the other hand, is an exception. A 17 year old student, he has complained on issues ranging from public infrastructures, abuse of power, the quality of education, good governance or the lack of it, etc... His complaints have gone beyond 3000 over the last five years. He lodges his grievances through Hello Sarkar, which literally means Hello Government in Nepali.

Pulled by the abstract of the event organized by Martin Chautari, I decided to see how the case of Grievance Redress Mechansim (GRM) is working in Nepal. The event information stated: Hello Sarkar aims at making the government more accountable to the people by addressing citizens’ grievances on public service delivery directly. It is located at the heart of the state machinery, the Office of the Prime Minister and the Council of Ministers. Concerned citizens can approach the system via phone (toll-free number- 1111), mobile texts, email, social media or website.

Rebooting Vietnam’s PPP program: Legislation that builds on lessons learned

Stanley Boots's picture

After over two years of development and drafting, Vietnam’s Decree 15 on Public Private Partnerships (PPP Decree) came into effect last spring. Dedicated specifically to the identification, preparation, and implementation of PPP projects, the PPP Decree replaced the largely unimplemented regulations for pilot PPP projects as well as the regime for build-operate-transfer (BOT), build-transfer-operate (BTO), and build-transfer (BT) projects. Almost a year after the PPP Decree was issued, it’s become clear that it has rebooted Vietnam’s potential for PPPs in a significant and lasting way. 

Resolving disputes, avoiding litigation in India

Shanker Lal's picture
An overhaul of Dispute Boards looks to prevent delays in the creation of new infrastructure, such as the construction of roads and railways.
Photo: Simone D. McCourtie / World Bank

A significant percentage of government spending in India goes towards the creation of new infrastructure like the construction of roads, ports, railways and power plants. Construction contracts, however, often have a reputation for disputes and conflicts between contractors and governments. Such disputes ultimately delay implementation of the contracts and increase total costs, adversely impacting development outcomes of the projects.

Many countries have found that Dispute Boards offer an effective mechanism for resolving these issues in a timely and cost-effective manner. These boards, composed of one to three members, are set up upon commencement of a contract and help the involved parties avoid or overcome disagreements or disputes that arise during the contract’s implementation. The boards are less legalistic, less adversarial, less time consuming and less costly than options for resolving disputes within the legal system, including arbitration and litigation.

A 2004 study (PDF) shows that Dispute Boards have been successful in resolving even the most strenuous disputes with an almost 99% success rate. The savings in using these boards are enormous: another study indicates that in almost 10% of projects, between 8% and 10% of the total project cost was legal cost.

Olympic-sized ambition: Halt the Games' economic excess by building a permanent site for the Olympics — in Greece, their historic home

Christopher Colford's picture

Build it well, build it wisely, and build it only once — How investing to create a permanent site for the Olympic Games, ideally in their historic home of Greece, could reduce waste, deliver economic stimulus, and avoid "white elephant" monuments to extravagance.


The jeering of angry taxpayers and frustrated favela-dwellers may drown out some of the cheering of sports enthusiasts this weekend, as the 2016 Olympic Games begin in Rio de Janeiro. The government of Brazil and local officials in Rio have certainly done their best to stage the Games successfully, addressing a range of challenges that include the Zika virus outbreak, the doping scandal among athletes and the country’s prolonged economic slump and political traumas. Yet an enduring scandal in international finance — the chronic design flaw in the way that the Games are planned for and paid for — has again imposed an enormous economic burden on the Olympic host city. Struggling economies can ill afford the extravagance of repeatedly building use-once-throw-away sports facilities.

It was surely startling to see the deep degree of scorn and sarcasm with which many workaday Brazilians, who are now enduring a deep economic downturn, hurled derision at the arrival of the Olympic torch in Rio this week. They evidently saw that Olympic arrival ceremony as a symbol, not just of athletic ambition, but of financial folly.

The anxieties that Brazil has endured on the road to Rio 2016 should underscore a longer-term, Olympic-sized concern: Mismanagement by the Games' promoters has now been thoroughly documented, underscoring the abusive way that the International Olympic Committee (IOC) and the global sports-industrial complex have habitually foisted reckless costs on the taxpayers of hapless host cities.

By goading Olympic-wannabe cities to make ever-more-extravagant financial commitments – stoking their dreams of a media moment of purchased publicity – the mega-event industry has helped shatter the finances of one host city after another. No wonder that so many cities are now shunning the IOC’s bidding process, dreading the deadweight losses that are almost certain to burden any Olympic host.

Welcome as the IOC’s recent “Olympic Agenda 2020” reform proposals may be, it’s long past time to rein in the financial excesses of mega-event promoters. With a claque of financiers and flacks who are ready to manipulate the gullibility of the would-be hosts, the Olympic spirit has fallen victim to the self-interest of construction firms, property developers and publicists who seek to profit from host cities’ overspending.

An invaluable book documenting this Olympic-scale threat – discussed in detail at a World Bank’s InfoShop book-and-author seminar in June 2015 – should be top-of-mind for Olympics-watchers this week, as Rio de Janeiro enjoys its moment in the spotlight. “Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup” — by Andrew Zimbalist, a professor of economics at Smith College — can help other cities avoid an impulsive rush for momentary Olympic notoriety. A video of Zimbalist’s InfoShop presentation is archived at http://web.worldbank.org/WBSITE/EXTERNAL/PUBLICATION/INFOSHOP1/0,,contentMDK:20289125~pagePK:162350~piPK:165575~theSitePK:225714,00.html 

Trends in returns to schooling: why governments should invest more in people’s skills

Harry A. Patrinos's picture
Students at a training center.

One of the biggest economic benefits of schooling are labor market earnings. For many people, education and experience are their only assets. This is why I believe that it’s very important to know the economic benefits of investments in schooling.

The biology of budgeting: to strengthen accountability, think ecosystems

Paolo de Renzio's picture

There are few better ways to reveal whether a government’s rhetoric matches reality than examining how it raises and spends public money. Are funds being spent on the things it said they would be? Are these investments achieving the outcomes that were intended? In short, are government budgets accountable?   

The traditional model for how accountability functions is rather simple. "Horizontal accountability" describes the oversight exerted over the executive arm of government by independent state bodies such as parliaments and supreme audit institutions. "Vertical accountability" describes the influence citizens hold through the ballot box. 

Between elections and outside of formal institutions, however, opportunities for influencing how governments manage public resources are limited. As a consequence, this simple vertical/horizontal model has proved increasingly inadequate for capturing how budget accountability works (or doesn’t) in the real world; this is especially true in developing countries, where democratic processes and formal oversight institutions can be somewhat fragile and ineffective. 

Breaking down barriers to competition: Unlocking Africa’s potential through a regional platform for cooperation

Klaus Tilmes's picture



The cement industry in Africa is one of the sectors that would benefit from stronger competition policies, which can help strengthen the economy by preventing anti-competitive behavior and collusive price-fixing. 
Photo by Simon Davis / DFID — U.K. Department of International Development

What determines whether a country is able to reap the benefits of deepening regional integration and the related increases in trade, cross-border investment and economic opportunities from participating in global value chains? One of the key points in this timely discussion is ensuring that the gains from integration are not nullified by anticompetitive business practices or distortive government interventions. As economies become more interconnected, it will become ever more important to allow all businesses to compete on a level playing field. Some African economies, for example, have not benefited as expected, in part because of the continued existence of barriers to competition in domestic markets.

These concerns lie at the heart of a new publication developed by the World Bank Group in partnership with the African Competition Forum (ACF). The report explores competition issues that affect the performance of key markets in Africa, and it reviews the status of competition policy and its implementation across the continent. It is the first report to take a broad regional perspective on competition issues – and the first to be built on a partnership between the World Bank Group and a regional network of government agencies and ministries responsible for competition.

Among its findings, the report shows that reforms in input sectors, such as professional services, can boost the export competitiveness of downstream firms that use those inputs intensively. However, in many cases, trade is restricted when governments impose non-tariff barriers, including product standards or testing regimes that are more restrictive than necessary, which prevent the entry of new, lower-cost products. This is the case with fertilizer markets in both East and West Africa. Even when such non-tariff barriers are removed, it is important to prevent anti-competitive behavior, such as collusive price-fixing and market-allocation agreements among competitors – as was seen in the case of cement in South Africa, Namibia and Botswana.

The report also highlights that, in some sectors in Africa, the same firms operate in many countries and some firms may locate themselves in areas that allow them to supply markets across borders. These factors hold potential efficiencies – for example, where it leads to economies of scale – but it also makes it vital to view competition dynamics through a regional lens as well as a national one.

Making politics work for development

Stuti Khemani's picture

Fear of openly confronting politics can come in the way of achieving economic development goals. To help address this problem, the Development Research Group of the World Bank prepared a report synthesizing the vanguard of economics research on the functioning of political markets to understand the implications. It yields insights for strengthening existing transparency and citizen engagement policies with potentially powerful consequences for economic development everywhere, in poor and rich countries alike.

Well-regulated financial technology boosts inclusion, fights cyber crime

Joaquim Levy's picture

Luceildes Fernandes Maciel is a beneficiary of the Bolsa Família program in Brazil. © Sergio Amaral/Ministério do Desenvolvimento Social e Agrário

Financial technology — or FinTech — is changing the financial sector on a global scale. It is also enabling the expansion of financial services to low-income families who have been unable to afford or access them. The possibilities and impact are vast, as is the potential to improve lives in developing countries.

The financial sector is beginning to operate differently; there are new ways to collect, process, and use information, which is the main currency in this sector. A completely new set of players is entering the business. All areas of finance — including payments and infrastructure, consumer and SME credit, and insurance — are thus changing.


Pages