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Public Sector and Governance

Face to face with William Maloney, Chief Economist, Equitable Finance and Institutions

Nandita Roy's picture

Returns on technological adoption are thought to be extremely high, yet developing countries appear to invest little, implying that this critical channel of productivity growth is underexploited. A recent World Bank study – The Innovation Paradox: Developing-Country Capabilities and the Unrealized Promise of Technological Catch-Up – sheds light on how to address this paradox. In this interview, William Maloney Chief Economist, Equitable Finance and Institutions Practice Group, World Bank Group, calls upon developing country public and private-sector leaders to pursue a more focused approach to innovation policy.



What is the new study Innovation Paradox all about?

The potential gains from bringing existing technologies to developing countries are vast, much higher for poor countries than for rich countries. Yet developing-country firms and governments invest relatively little to realize this potential. That’s the origin of what we are calling ‘The Innovation Paradox’.

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Why do firms in developing countries lag behind when it comes to innovation?

The Innovation Paradox, argues that developing country firms choose not to invest heavily in adopting technology, even if they are keen to do so, because they face a range of constraints that prevent them from benefitting from the transfer.

Developing country firms are often constrained by low managerial capability, find it difficult to import the necessary technology, to contract or hire trained workers and engineers, or draw on the new organizational techniques needed to maximize the potential of innovation. Moreover, they are often inhibited by a weak business climate. For example, small and medium enterprises (SMEs) are constantly in a situation where they are putting out fires, they don’t have a five-year plan, they don’t have somebody keeping track of what new technology has come out of some place that they could bring to the firm.

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How can developing economies catch up with the developed world on innovation?

The rates of return to investments and innovation of various kinds appear to be extremely high, yet we see a much smaller effort in these areas.  In the developing countries, we need to think not only about barriers to accumulating knowledge capital, we have to think about all the barriers to accumulating all of the complementary factors—the physical capital. So, if I have a lousy education system, it doesn’t matter if I get a high-tech firm because there won’t be any workers to staff it.

Innovation requires competitive and undistorted economies, adequate levels of human capital, functioning capital markets, a dynamic and capable business sector, reliable regulation and property rights. Richer countries tend to have more of these conditions. This is at the root of Paradox. Even though follower countries have much to gain from adopting existing technologies from the advanced countries, in practice, missing and distorted markets, weak management capabilities and human capital prevent them from taking advantage of these opportunities.

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Honduras launches new PPP disclosure portal

Giorgio Valentini's picture



This past spring, Honduras took an important step in improving transparency and accountability with respect to Public-Private Partnerships (PPP) by launching an online platform that allows public access to detailed information about these activities.

The portal, created with the support of the World Bank and in coordination with the Construction Sector Transparency Initiative (CoST), allows access to information related to PPP projects through their entire project cycle. This is a significant achievement that promotes transparency in PPP planning, procurement, implementation and monitoring in Honduras, by making information easily accessible to citizens.

How data can benefit Nepal

Ravi Kumar's picture

Thirty years ago, almost everyone in Nepal —except for a few professionals and business people—would have been classified as poor by any reasonable international standard.

In 2010, by contrast, 15 percent of Nepalis were considered poor.

Without a doubt, Nepal has made progress.

Now the 761 newly formed—local, provincial, and federal—governments in Nepal aim to provide all Nepalis access to essential public services, eliminate poverty, reduce gender and ethnic inequalities, and ensure environmental sustainability

The hope is that Nepal will reach middle-income status by 2030.

But tracking and monitoring progress against the goals articulated in Nepal’s development vision as well as the global Sustainable Development Goals (SDGs) impose significant demands on the country.

Unfortunately, the absence of disaggregated data by geography, sex, age, social groups and sub-national level, and more poses an enormous challenge for all levels of governments to properly plan and budget.

As such, Nepal needs to urgently invest in its data and statistics capacity.

Data is the currency for decision making and helps us understand what works and what doesn’t.

For instance, let’s consider a province in Nepal that is keen to improve learning for its public schools’ students.

Without data on students, their gender, age, academic performance, or the number of schools and teachers, the provincial government cannot elaborate an informed plan for its students.

But were policymakers able to access timely and sufficient data, they could decide whether more teachers or more schools are needed. Without data, decisions are just like shooting in the dark and hoping for the best.   

Regenerative PPPs (R+PPP): Designing PPPs that keep delivering

David Baxter's picture


Photo: Misako Kuniya | Flickr Creative Commons

The time is ripe to explore innovative ways to implement PPPs through a synthesis of sustainable and resilient best practices that progressively improve delivery and outperform original expectations.
 
During my recent travels as a PPP advisor to Europe, the Middle East, and Southeast Asia, I worked closely with public sector leaders who are increasingly focused on procuring a new generation of PPPs that are meaningful, sustainable, resilient, people-focused, and will support their governments’ goals of achieving the Sustainable Development Goals (SDGs).
 
A government official from the Balkans had a concern about maturing PPPs in his country. Projects that had been launched at the end of communism were reaching the end of their lifetime and would be in a poor state when returned to the government by under-performing private sector partners who had not met their obligations to ensure the operations and maintenance would guarantee the government received back projects in good working order. Additionally, there was concern that if the perception arose that PPPs had resulted in “privatization of profits and nationalization of debts” that the potential for future PPP projects would be jeopardized.
 
These projects that could stop delivering once handed back to the public sector because of a lack of financial and human capital resources would set the country’s development agenda back—as it could not afford to build new projects and refurbish old ones at the same time.

What was needed were projects that continued delivering.

Getting value for money: Creating an automated market place for farmers in Pakistan

Khalid Bin Anjum's picture
NANKANA SAHIB: PAKISTAN. Photo: Visual News Associates / World Bank

The challenge with procuring a high volume of low-value goods is keeping the transaction costs down while still delivering the value-for-money trifecta: low cost, at the required quality, and on time. Alibaba, Amazon, eBay and many other online platforms do this for sellers by setting up a “honey pot” market place that attracts buyers and then largely automates the rest of the procurement, delivery and feedback processes. An e-marketplace can help make the agricultural sector more efficient in Pakistan.

Local elections in Tunisia: an opportunity to give interior regions a fair chance?

Antonius Verheijen's picture


Watching party activists pass out election leaflets in Bizerte on Labor Day gave me the first tangible feel that local elections were coming, in an otherwise quite understated campaign. While some may feel disappointed about the relatively low-key process, and even more so with voter turnout, sometimes ‘understated’ is also a good thing: the sense that local elections in Tunisia, the first one since 2011, can be a ‘normal’ political occurrence in a context where democracy is evolving.
Image already added
 
 
 

More and better infrastructure services: Let’s look at governance; financing will follow

Abha Joshi-Ghani and Ian Hawkesworth's picture


Photo: AhmadArdity | Pixabay 

There are many reasons why infrastructure projects often fail to materialize, meet their timeframe, budget, or service delivery objectives. Important examples include weak and insufficient planning and assessment of affordability as well as uncertainty over the rules of the game. 

These issues severely constrain the ability of governments to mobilize finance to deliver key services that help achieve the Sustainable Development Goals (SDGs). The World Bank estimates that achieving the SDGs would require some $4.5 trillion in public and private investment by 2030.

In light of the financing requirements for the SDGs, the World Bank has developed the Maximizing Finance for Development (MFD) approach to help governments and other stakeholders crowd in private sector solutions while optimizing the use of scarce public resources. The success of the MFD initiative will depend in large measure on whether good infrastructure governance practices and tools are adopted.
 
The World Bank Group and the African Development Bank, with support from key development partners, have organized the second Infrastructure Governance Roundtable, to be held in Abidjan, Cote d’Ivoire, June 21-22, to foster a robust dialogue on how best to improve infrastructure governance practices to create sustainable infrastructure, and to assist with building capacity in this area.

Applications open for third round of funding for collaborative data innovation projects

World Bank Data Team's picture
Photo Credit: The Crowd and The Cloud


The Global Partnership for Sustainable Development Data and the World Bank Development Data Group are pleased to announce that applications are now open for a third round of support for innovative collaborations for data production, dissemination, and use. This follows two previous rounds of funding awarded in 2017 and earlier in 2018.

This initiative is supported by the World Bank’s Trust Fund for Statistical Capacity Building (TFSCB) with financing from the United Kingdom’s Department for International Development (DFID), the Government of Korea and the Department of Foreign Affairs and Trade of Ireland.

Scaling local data and synergies with official statistics

The themes for this year’s call for proposals are scaling local data for impact, which aims to target innovations that have an established proof of concept which benefits local decision-making, and fostering synergies between the communities of non-official data and official statistics, which looks for collaborations that take advantage of the relative strengths and responsibilities of official (i.e. governmental) and non-official (e.g.,private sector, civil society, social enterprises and academia) actors in the data ecosystem.

Helping Bhutan’s parliamentarians better understand economics

Yoichiro Ishihara's picture
Bhutanese Council Members and World Bank Staff
Bhutan's newly elected council members with World Bank staff. 

Members of parliament are valuable partners for the World Bank. They enact laws, shape and review development policies, and hold governments accountable for World Bank-financed programs. This applies for the landlocked Himalayan kingdom of  Bhutan. The role of its parliament has been increasing since the country’s successful transition from monarchy to constitutional monarchy in 2008. Through its engagement with these elected representatives, the World Bank effectively integrates citizen voice in its programs to achieve lasting and inclusive development results.
 
A joint workshop between the World Bank and National Council of Bhutan, the upper house, was a great opportunity for the World Bank to engage with the 25 newly elected National Council members.

Can good infrastructure decisions be made with little information?

Aditi Raina's picture



The simple answer is yes—with a little help from the Infrastructure Prioritization Framework developed by the World Bank.
 
Experts can make decisions based on remarkably few pieces of information. Research by James Shanteau at Kansas State University has shown that expertise is reflected in the type of information used, not the amount of it. The Infrastructure Prioritization Framework, or IPF, attempts to capitalize on precisely these aspects of expertise and decision-making. This enables objective evaluations of infrastructure projects using minimal but relevant data in information-constrained environments.
 
Why is this important? It’s easy to make decisions when complete information is available. But this is rarely the case in most developing economies, where policymakers must rely on limited data to make decisions. But this does not mean the resulting decisions have to be poor. Critical to such situations is the ability to identify and select accurate and relevant information to achieve the desired objectives, something that requires experience, expertise, and judgment. 


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