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Private Sector Development

An update on Bhutan’s economy

Tenzin Lhaden's picture
Accelerating the reform momentum after the 2018 elections is key to consolidating and furthering Bhutan’s development
Accelerating the reform momentum after the 2018 elections is key to consolidating and furthering Bhutan’s development. Credit: World Bank

Bhutan is one of the smallest, but fastest-growing economies in the world.
 
Its annual average economic growth of 7.6 percent between 2007 and 2017 far exceeds the average global growth rate of 3.2 percent.
 
This high growth has contributed to reducing poverty: Extreme poverty was mostly eradicated and dwindled from 8 percent in 2007 to 1.5 percent in 2017, based on the international poverty line of $1.90 a day (at purchasing power parity).
 
Access to basic services such as health, education and asset ownership has also improved significantly.
 
The country has a total of 32 hospitals and 208 basic health units, with each district hospital including almost always three doctors.
 
The current national literacy rate is 71 percent and the youth literacy rate is 93 percent.
 
The recent statistics on lending, inflation, exchange rates and international reserves (Sources: RMA, NSB) confirm that Bhutan maintained robust growth and macroeconomic stability in the first half of 2018.  

Gross foreign reserves have been increasing since 2012 when the country experienced an Indian rupee shortage.
 
Reserves exceeded $1.1 billion, equivalent to 11 months of imports of goods and services, which makes the country more resilient to potential shocks.
 
The nominal exchange rate has been depreciating since early 2018 (with ngultrum reaching Nu. 73 against the US dollar in early November).

Poor sanitation is stunting children in Pakistan

Ghazala Mansuri's picture
A nutrition assistant measures 1 year old Gullalay’s mid-upper arm circumference (MUAC) at UNICEF supported nutrition center in Civil Dispensary Kaskoruna, Mardan District, Khyber-Pakhtunkhwa province, Pakistan.
With a stunting rate of 38 percent, Pakistan is still among the group of countries with the highest rates of stunting globally and the pace of decline remains slow and uneven. In Sindh, for example, things have worsened over time, with one in two children now stunted. Credit: UNICEF


More than one in every three children born in Pakistan today is stunted.

Child stunting, measured as low height for age, is associated with numerous health, cognition and productivity risks with potential intergenerational impacts.

With a stunting rate of 38 percent (Demographic & Health Survey 2018), Pakistan is still among the group of countries with the highest rates of stunting globally and the pace of decline remains slow and uneven.

In Sindh, for example, things have worsened over time, with one in two children now stunted!

The policy response to this enormous health crisis has been almost entirely centered on interventions at the household level—reducing open defecation (OD), improving household behaviors like child feeding and care practices and food intake.  

A recent World Bank report, which I co-authored, suggests that a major shift is this policy focus is required for significant progress on child stunting.

The report begins by showing that over the past 15 years Pakistan has made enormous progress in reducing extreme poverty, with the poverty rate falling from 64 percent to just under 25 percent in 2016.

This has improved dietary diversity, even among the poorest, and increased household investment in a range of assets, including toilets within the home.

This has, in turn, led to a major drop in OD, from 29 percent to just 13 percent. Curative care has also expanded, with the mainstreaming of basic health units and the lady health worker program.
 

Bridging the skills gap is key for energy access, new jobs

Rebekah Shirley's picture
Frontier Markets (night shot)/Power for All


Progress is being made in closing energy access gaps in Africa and Asia. A big reason is falling renewable energy costs, which have made home solar systems, mini-grids and other distributed renewable energy (DRE) solutions a viable option for providing first-ever electricity in remote, rural areas far removed from electric grids.

For the first time ever, the number of people gaining access to electricity in Sub-Saharan Africa is outstripping population growth. More than 700,000 home solar systems have been installed in Kenya alone and another 240,000 poor, rural households are expected to be connected soon under a new $150 million off-grid project backed by the World Bank. In South Asia, progress has been ever faster.

What will it take to accelerate these gains for the nearly 1 billion people worldwide still living without electricity?

Keeping the public and private in PPPs

George Castellanos's picture


Tomas Castelazo | Wikimedia Commons

The Colombian magazine Dinero, one of the most respected economic publications in Latin America, recently published a story about a World Bank study that placed Colombia as the second most competitive country in the world—behind a tie between Great Britain and Australia—to finance infrastructure projects under the public-private partnership model (known as PPPs). This score (83 points out of 100) was also shared by Paraguay and the Philippines.

At first glance, this is a virtuous recognition—at least on paper. However, in daily practice in the Latin American region, like most emerging economies, the administrative complexity of government bodies still presents enormous challenges that demand immediate attention if PPPs are to reach their full potential. Getting this right would truly integrate the PPP model into the economic and social development engine required to compete in a globalized economy.

How Pakistan can diversify, digitally

Miles McKenna's picture

A year ago, Farzana had no idea that an online business would so drastically change her life. She was drowning in debt with no way of repaying, worrying about her family’s financial future. Reaching for a lifeline, she joined GharPar, a women-founded, women-led social enterprise that connects beauticians with clients seeking at-home salon services through an Uber-like digital platform.

 
 

Marginal changes for the many or focusing on the few? Trade-offs in firm support policies and jobs

David McKenzie's picture

Should governments aiming to improve job opportunities devote additional resources towards trying to provide programs that attempt to generate marginal changes in many micro and small firms, or try to target the support towards making larger impacts on a smaller number of high-growth and larger firms? For example, should a government spend an additional $5 million on grants and training programs that support 25,000 micro firms at $200 each, use it to give 100 grants of $50,000 each to 100 high-growth potential firms, or use it as a single $5 million tax incentive to encourage one large multinational to set up a manufacturing plant in the country? I’ve been asked my thoughts on this question quite a few times, so thought I’d share them here.
 
The answer involves many different trade-offs and considerations, and I attempt to summarize some of the key ones in this post. The bottom line is that there are trade-offs (at least in the short-run) between poverty alleviation and productivity growth, and that different policies will have impacts on different types of job creation. A key lesson for policymakers is to be clear about what the job problem is that they are trying to solve, and not try to use the same policy instrument to achieve multiple competing priorities.

Doing better business to fight poverty

Duvindi Illankoon's picture
The new Doing Business ranking places Sri Lanka at 100 out of 190 economies, compared with 111 last year. This year Sri Lanka made it easier for businesses to register property, obtain permits, enforce contracts and pay taxes. Credit: World Bank

End Poverty Day fell on the 17th of October. Two weeks later, the new Doing Business rankings come out for this year.

If you’re wondering what the link is, here’s a quick summary: business-friendly regulations can be instrumental in lowering poverty at the national level.

This is one of those happy instances where economics, common sense and the data align.

A better regulatory environment encourages more businesses to register and expand, bringing more employers to the economy.

Then the market responds- not only do these employers create more jobs, but also going to offer better jobs to attract capable workers to their companies.

Ultimately, a reliable source of income is the catalyst to moving out of poverty.

Sounds too simple? Trust the numbers.

Afghanistan eases doing business

Shubham Chaudhuri's picture
Doing Business Better in Afghanistan


Despite a volatile business environment, Afghanistan has made gains to improve the ease of doing business in the country.

These gains resulted in Afghanistan’s ranking in Doing Businessa World Bank report that measures business regulations across 190 economies—jumping from 183 in 2018 to 167 in the 2019 report, earning the country a coveted spot in this year’s global top improvers.

This is a first for Afghanistan and the upshot of the record five reforms was to improve the business environment for small and medium companies, increase shareholders’ rights and role in major corporate decisions, and strengthen access to credit.

With more than half of the Afghan population living below the national poverty line, Afghanistan needs to catalyze private investment and create jobs, helping entrepreneurs advance their business initiatives and helping established private businesses, small and large, to grow and create jobs.

There is a great deal of work to do in this regard, but the good news is that Afghanistan is serious about improving its investment climate. An overview of the key reforms Afghanistan has undertaken in the last year shows how the country is easing constraints faced by entrepreneurs and investors:

Subtle but significant changes to private infrastructure investment in first half of 2018

Jordan Z. Schwartz's picture



Like winter and summer solstices of investment cycles, every six months we take stock of how much private participation in infrastructure has come to financial close across emerging markets.  From Mozambique to Moldova, Chile to China—in power, water, transport, and the backbone of telecom services—the World Bank Group tracks every new public-private partnership (PPP), privatization, auction, concession, lease, and management contract through our PPI Database.

How can Local Capital and Foreign Brands Join Forces to Create Millions of Jobs? The Case of Non-Equity Modes of Investment

Priyanka Kher's picture

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