Africa is growing fast but transforming slowly. This is the message of the 2014 African Transformation Report, launched last week by the African Center for Economic Transformation (ACET). The report addresses a worry on the minds of many: in spite of impressive growth, the structure of most sub-Saharan African economies has evolved little in the past 40 years, with a poorly diversified export base, limited industrialization and technological progress, and a large informal economy whose economic potential remains mostly overlooked. In many African economies, manufacturing—the sector that has led rapid development in East Asia—is declining as a share of GDP. The worry is that without a major transformation Africa’s recent growth may soon run out of steam. The report argues that for growth to continue, Africa needs to invest in “DEPTH”–diversification, export competitiveness, productivity, and technological upgrading, all for the purposes of human well-being.
Sri Lanka conjures up different images in the minds of different people: lush green tropical canopies, steaming cups of aromatic tea, and hardworking fishermen in their dinghy boats.
For me, the country also packs enormous promise for growth and development. There is not the slightest doubt that Sri Lanka will have to come clean and deal with the aftermath of its prolonged civil war. However, at a fundamental level, there is a sense of hunger in its people to rebuild their lives and their country. The new-found peace that engulfs the population is cherished by most, and is part of dinner conversations especially with foreigners like me.
Sri Lanka already holds a strong position in certain agricultural and industrial exports, like tea or uncut diamonds. Combine this with its strategic location – situated at the crossroads of major shipping routes connecting South Asia, East Asia and the Middle East – and you have a potent combination, a promise waiting to be fulfilled.
I recently spoke at an event organized by the country’s top business newspaper, the Daily Financial Times, in partnership with the well-regarded Colombo University MBA Alumni Association. The focus of the forum was the country’s emerging six-hub strategy – Maritime, Commercial, Knowledge, Aviation, Energy and Tourism: the cornerstone of its further economic development.
The euphoria leading up to the event was palpable. The ceremonial drums and lighting of the auspicious lamp to evoke good omen created the perfect ambience. I was nervous, not because of stage fright, but because I was about to present a contrarian viewpoint to private-sector and public-sector experts, while sharing the stage with the Minister of Economic Development and the Governor of the Sri Lanka’s Central Bank. Even though my arguments were well-thought-through and fact-based, it was going to be a delicate dance, as I was about to communicate some tough arguments against the implementation of the full-blown six-hub strategy.
What does it take to make reforms work in small island countries?
At the end of June 2013, twelve Caribbean countries presented a roadmap for growth in three areas -logistics and connectivity, investment climate, skills and productivity- to a broad audience of private sector representatives, international development institutions, regional organization, civil society and media. That event culminated a 7-month long phase during which policy-making was not the result of close-doors meetings, but a process of intense negotiation, consultations, and consensus building among all actors of each Caribbean country’s societies. All of which was documented in real time and in a transparent fashion by each government. Yes, business was not “business as usual”.
Reforms priorities were agreed and a calendar for implementation brushed on a power point slide in the wonderful framework of five stars Bahamian hotel…After the workshop lights, projects and microphones shut down, many of us went home with a familiar sound in our ears: and now what? Was it another “talkshop”?
- economic growth
- world bank
- caribbean growth forum
- Social Development
- Information and Communication Technologies
- Global Economy
- Financial Sector
- Latin America & Caribbean
- Virgin Islands, British
- Trinidad and Tobago
- St. Vincent and the Grenadines
- St. Lucia
- St. Kitts and Nevis
- St. Helena
- Dominican Republic
- Bahamas, The
- Antigua and Barbuda
In a report released today, Connecting to Compete 2014: Trade Logistics in the Global Economy, we summarize the results of the Logistics Performance Index (LPI), and examine some of the factors behind different countries’ performance. The index and report, which have been produced about every two years since 2007, rank countries on a number of dimensions of trade, including customs performance, infrastructure quality, and timeliness of shipments.
Nowadays the importance of efficient supply chains for trade integration is recognized globally. Most sources of friction in the global economy—trade costs—are attributable to logistics bottlenecks. These might be physical deficiencies, red tape, especially at borders, or a lack of quality services. The LPI has greatly helped the realization that policy does matter for efficient logistics, and is widely referred to as a guide by policy-makers, including in rich countries such as those in the EU. It has contributed to creating a dynamic of reforms in many developing countries where the Bank has logistics-oriented programs. We are just back from Georgia and Indonesia, and our team is currently in Rabat, Morocco, where we are promoting projects to integrate supply chains of the Maghreb.
The Western Balkans Case
The Western Balkans have a lot going for them: ideal location next to the world’s largest economic bloc, a well-educated workforce, relatively low wages and decent infrastructure. FDI and investors should be rushing in … but are they?
Southeast Europe is the next frontier of EU expansion and includes six countries: Albania, Bosnia & Herzegovina, Kosovo, Macedonia, Montenegro and Serbia. These countries have a lot in common and an equal amount of differences. They are all relatively small open economies, with a growth strategy premised on deeper international integration. Some, especially Macedonia, are more advanced in attracting international investors but as a whole, the region seems to be stuck in a classical Middle Income Trap: they are too rich to compete on low-cost manufacturing but are too poor to be global innovators. After a strong recovery following war and conflicts in the 1990s, the growth momentum has stalled over the last five years and the region has been particularly vulnerable to external shocks.
In 1991, Egypt launched the Economic Reform and Structural Transformation Program (ERSAP) to address dire economic conditions. The difficult financial situation forced the government to reschedule its public debt twice, in 1987 and 1991. The Egyptian reform program moved at a slow pace until 2003, when the government pushed for further liberalization of the economy. The government began by floating the rate of exchange of the Egyptian pound in 2003, followed by the implementation of a series of policies aiming at shifting Egypt from a centrally planned to a free market economy.
The successful WTO Ministerial at Bali has placed trade facilitation in the spotlight, but it is export promotion that takes pride of place in most national trade policy agendas. Sometimes export promotion seems a virtuous exercise, targeting small firms most in need of help. The US Government’s efforts through its Small Business Administration or under the National Export Initiative are an example. At other times, it seems cold-bloodedly pragmatic, geared towards large firms most able to use assistance. Examples are government support for national champions from Brazil to South Korea.
According to the World Bank report, "Women and Trade in Africa: Realizing the Potential", eliminating gender-specific barriers can help boost trade and increase productivity in Africa. Behind the research for this report were women who shared their personal stories of how they overcame gender discrimination at work in order to realize their potential.