The Financial Data Team of the Development Economics Data Group (DECDG) is pleased to announce the launch of our Online Quarterly Bulletin’s second edition, an e-newsletter spotlighting debt statistics news, trends, and events. The current issue features the following:
Organizing Public Sector Debt (QPSD) statistics to maximize their analytical use and international comparability
Bond Issuance by low- and middle-income countries in 2015
External debt trends for high-income countries in 20105
Debt statistics-related event summaries
One highlight in this edition is the introduction of the D1-D4 matrix, a cascading approach used to present the QPSD data. The primary aim of the QPSD initiative is to institute a standardized measure for each dimension of public sector debt. The QPSD database displays country data for the same set of debt instruments such as 1. debt securities, 2. loans, 3. currency and deposits, 4. Special Drawing Rights, 5. Other accounts payable, and 6. insurance, pensions, and standardized guarantee schemes for the following institutional sectors of the economy: 1) general government, (2) central government, (3) budgetary central government, (4) non-financial public corporations (5) financial public corporations, and (6) the total consolidated public sector debt.
It’s a simple drain, made of tiles, running down the middle of the street. There is nothing especially dramatic about the drain, but looks can be deceiving. It is in fact a sign of the changing relationship between local municipalities in Tunisia and their residents.
One of the key objectives for our research program at the Stanford Global Projects Center is to understand how the largest sources of capital in the world can be channeled into critical infrastructure and development projects most in need of it. In particular, we focus on long-term institutional investors (pension funds and sovereign wealth funds) and private development firms at one end of the spectrum, and government procurement agencies and departments at the other. We are essentially trying to assist in overcoming a number of inefficiencies that seem to be apparent in linking the original source of capital to projects on the ground. In this blog post, we would like to highlight some of the latest trends and issues confronting the institutional investor space; in subsequent blogs, we will showcase some of the work we have done at the government procurement level to facilitate investment.
In the state of Chiapas, Mexico — where nearly 1 million people live in moderate to extreme poverty — bus fares have been too high, and the availability of buses has been limited. Over four years, consumers on a single route have paid $2.5 million more than necessary. Tortillas in states across Mexico are more expensive than they need to be. In one state, firms overcharge for road construction by an estimated 15 percent, making it difficult to provide the high-quality transport services for cargo and construction materials that are necessary to build a logistics hub to diversify the state economy beyond petroleum. Another state has a very dynamic economy, hosting a greater density of industrial parks than comparable states. Given the positive spillover effects — industrial activity boosting local employment, demand, and purchasing power — the state expected growth in retail markets. Yet, stores have not been opening. Yet another state relies on tourism to generate business opportunities and jobs, including for poor people. However, until recently, tourists found that commercial establishments in the state’s primary municipality closed in the evenings and at night, often preventing them from going shopping.
What do these examples have in common? Local barriers to competition.
In the past few years, the Mexican Federal Competition Authority (COFECE) and Better Regulation Authority (COFEMER), internationally recognized institutions, as well as the World Bank Group, have pointed out that subnational regulations restrict competition in local markets. In many municipalities in Mexico, regulations and government interventions allow market incumbents to deny entry to new firms, to coordinate prices, to impose minimum distances between outlets, or to grant incumbents exclusive rights to artificially protect their dominant position. In total, a lack of vigorous marketplace competition costs the Mexican economy about one percentage point of GDP growth each year – a shortfall that affects the country’s poorest households by an estimated 20 percent more than its richest households. Most countries, however, have never systematically scrutinized local barriers to competition.
To address such issues effectively, competition policy experts from the World Bank Group’s Trade & Competitiveness Global Practice have developed an innovative tool – the Subnational Market Assessment of Competition (SMAC) – to systematically identify, prioritize and support the removal of local barriers to competition. (The SMAC is built from the World Bank Group Markets and Competition Policy Assessment Tool, or MCPAT.) The World Bank Group designed the SMAC to prioritize the reform of the rules and practices that most severely prevent healthy competition in the primary sectors for each state’s economic development.
Endemic violence also translates into less productivity, poorer health outcomes and high security costs. The cumulative cost of violence is staggering—up to 10% of GDP in some countries—with negative long-term consequences on human, social, economic, and sustainable development.
The good news is that violence can be prevented. For example, cities like Medellin in Colombia and Diadema in Brazil have dramatically reduced homicide rate over the last few decades, thanks to tailored solutions backed by robust data analysis and a “whole-of-society” approach.
In this video, we will discuss why violence is an important development issue, how countries and cities can effectively fight violence and crime, and what the World Bank and its partners are doing to ensure security and opportunity for all—especially youth and the urban poor.
If you live in urban areas – which, according to the U.S. Census Bureau, over 80% of Americans do – you know the feelings associated with traffic. Busy roadways and overcrowded public transit lines are just some of the many consequences of the increased need for infrastructure investment in the U.S. To grow sustainably, cities must continue to make major investments in infrastructure – across healthcare, transportation, utilities, buildings, energy and even within our industrial base.
Sri Lanka amazes me in many ways, with its smiling faces among a rich tapestry of cultures, diversity, and natural wonders. On this fourth visit and first time in the Northern Province, I once again found a resilient and industrious people eager to build their lives and advance the country together.
As Sri Lanka recovers from an almost three-decade long conflict, much progress has been made. I am proud that the World Bank Group has been a close and trusted partner with the country to help restore lives, livelihoods, and unlocking the potential of all of its people, inclusive of men and women, diverse geographic locations, as well as different ethnic and religious backgrounds.
“Globalization and technological change create huge challenges for modern economies, but they are not uncontrollable forces of nature. The economy we have is the economy we choose to build. It is time to make different choices, and show that capitalism can be remade.” — Prof. Mariana Mazzucato of the University of Sussex and Prof. Michael Jacobs of University College London, the editors of “Rethinking Capitalism.”
The shadows lengthen and the daylight shortens amid these elegiac end-of-summer evenings — but there’s a palpable feeling nowadays, in Washington and other capitals, that we’re approaching not just the sunset of a season, but the twilight of an era.
In this insolite interim, the fraught phrase of Antonio Gramsci comes to mind: “The crisis consists precisely in the fact that the old is dying and the new cannot [yet] be born. In this interregnum, a great variety of morbid symptoms appear.”
Second: Diagnosing how a phase of economic history may have run its course, Nobel Prize-winner Joseph Stiglitz (a former Chief Economist of the World Bank) in Project Syndicate asserts that the laissez-faire approach to globalization has reached its (il)logical conclusion: “The failure of globalization to deliver on the promises of mainstream politicians has surely undermined trust and confidence in the ‘establishment.’ . . . Neoliberals have opposed welfare measures that would have protected the losers [of globalization]. But they can’t have it both ways: If globalization is to benefit most members of society, strong social-protection measures must be in place. The Scandinavians figured this out long ago; it was part of [their] social contract. . . . Neoliberals elsewhere have not – and now, in elections in the US and Europe, they are having their comeuppance.”
Third: A series of insightful columns by Martin Sandbu in The Financial Times – tracing an “insurrection [that] has been a long time coming” – explores the links among economic stress and social-class anxiety that provoked this year’s social eruption: “Over the past generation, the trajectory of the white working class has no doubt changed the most for the worse, compared with the previous generation.”
The China sourcing conundrum
In conversations with U.S. and European retailers and brands, ELEVATE – a company formed in 2013 to support corporate social responsibility – finds that apparel buyers rate diversifying away from China as one of their top three sourcing goals.
This is not to suggest that there is a desire to exit China – which currently holds by far the largest share of global apparel trade, at 41 percent – but rather a need to significantly reduce dependence on product from China, owing to rising costs, factory closures, unenthusiastic second generation family ownership, new attitudes about working in factories, and a perception that China wants to move to higher-value manufacturing. Sourcing and procurement organizations feel uncertain, and uncertainty is not a friend of supply chains.
The problem is that for all its uncertainty, China still has a huge base of factories, a well-developed transport infrastructure, and a comprehensive eco-system that supplies cut-and-sew operations, and management that has matured with years of experience. Even if a buyer would like to give another country an opportunity, many corporate risk managers view certain countries or regions as quite challenging for doing business.
Stitches to Riches? The Potential of Apparel Manufacturing in South Asia
South Asia could seize this opportunity by better meeting requirements – besides competitive costs – that are vital to global buyers. These include: (i) quality, which is influenced by the raw materials used, skill level of the sewing machine operator, and thoroughness of the quality control team; (ii) lead time and reliability, which are greatly affected by the efficiency and availability of transportation networks and customs procedures; and (iii) social compliance and sustainability, which has become central to buyers’ sourcing decisions in response to pressure from corporate social responsibility campaigns by non-governmental organizations, compliance-conscious consumers, and, more recently, the increased number of safety incidents in apparel factories.
Surveys of global buyers show that East Asian apparel manufacturers rank well above South Asian firms along these key dimensions, as noted in a new World Bank report on apparel, jobs, trade, and economic development in South Asia, Stitches to Riches (see table). So, what can South Asia, which now accounts for only 12 percent of global apparel trade, do to become a bigger player? An encouraging recent development is that buyers have started collaborating to facilitate new sourcing possibilities – as the case of Bangladesh illustrates.