As recently as 2006, Timor-Leste was in crisis. Only a few years into independence, the country was torn by riots and political turmoil. Not surprisingly, its business climate was one of the region’s worst.
But . Nonetheless, Timor-Leste remains a fragile state, and with oil accounting for 80 percent of GDP, it is the world’s second most oil-dependent nation.
Public Sector and Governance
When was the last time you participated in a community and worked together to reach a common goal? Communities across Sierra Leone are doing just that.
Broadly defined, logistics covers all aspects of trade, transport and commerce, starting from the completion of the manufacturing process all the way to delivery for consumption. To say that it is a complex business is an understatement.
First, there is always a delicate balance between the public arm, which provides the roads, railways and waterways, and lays down the rules and regulations, and the private sector, which has responsibility for carrying out logistics operations in a smooth and seamless manner. This fine interplay is further complicated by the globalization of manufacturing which—with many more ports of call in the logistic chain—is putting ever-increasing pressure on the sector. In addition, there are very practical challenges in integrating different modes of transport, in speeding up border crossings, and in dealing with trade protections–all of which impact external trade.
But as difficult as it might be, creating a well-functioning logistics sector is essential to any nation looking to compete in the global economy. India is a case in point. To fuel its global ambitions, the country has taken active steps to up its logistics game.
- South Asia
- Global Economy
- Information and Communication Technologies
- Law and Regulation
- Private Sector Development
- Public Sector and Governance
- sustainable transport
- sustainable mobility
- trade facilitation
- freight transport
- supply chains
- Supply Chain Management
- road transport
- Inland waterways
- waterborne transport
Home to Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka, South Asia is one of the world’s most dynamic regions.
It's also one of the least integrated.
A few numbers say it all: Intra-regional trade accounts for only 5 percent of South Asia’s total trade; Intra-regional investment is smaller than 1 percent of overall investment.
Challenges with decentralization
Seventeen years ago, Indonesia embarked on its so-called big bang decentralization. Almost overnight, responsibility to deliver many public services was transferred to local governments. This was done, in part, with the hope that the decentralization would make local government more agile and responsive to issues facing local communities. However, results have yet to materialize in many locations.
In my view, a key factor driving poor results is the central government’s approach to regulating local governments. In a decentralized environment, the central government has a legitimate role as a regulator to standardize service delivery or financial management procedures. However, in practice, they have been more focused on controlling inputs and processes, with little attention to accountability for results. This approach results in the proliferation of regulatory constraints and a fearful bureaucracy that make it difficult for local leaders to respond to citizen’s problems.
A snow storm was barreling toward New York City and the roster of attendees at the UN Statistical Committee meeting—myself included—fully expected that all flights would be canceled. Fifty statisticians made the same calculation—to find the closest bar. I headed to the Vienna Café in the UN headquarters building, a place which affords one the rarified opportunity to socialize with high-level government officials from around the world. On my way in, I recognized the Director-General of a statistics office from an African country and we spoke. I mentioned several statistical programs that donors were planning to finance in his country. He expressed enthusiasm about these projects but voiced an increasingly familiar note of concern about long term sustainability of his agency in general. He fretted that his entire statistical office would collapse without donor support. He admitted that most of the demand for data was coming from the donors themselves, as indicators for their own reporting and planning; the country’s own government had much less interest in data or statistics.
The journey is ongoing as Nepalis continue to confront and challenge the conventional wisdom about Nepali statehood and chart a path towards a more inclusive, equitable and modern nation-state.
The new federal structure also redefines the World Bank Group (WBG)’s engagement with Nepal. This week, as the WBG’s Board of Executive Directors endorsed a new five-year Country Partnership Framework (CPF), Nepal’s Finance Minister Yuba Raj Khatiwada attended a series of Nepal Day events at the WBG headquarters in Washington DC. There, he unfurled the new government’s vision and development priorities and discussed approaches to address Nepal’s financing and knowledge needs in the WBG’s upcoming programme of assistance.
. To that end, our strategy and approach seeks to support the authorities and engage with development partners in three transformative engagement areas: (i) public institutions for economic management, service delivery and public investment; (ii) private sector-led jobs and growth; and (iii) inclusion for the poor, vulnerable, and marginalised groups, with greater resilience against climate change, natural disasters, and other exogenous shocks. These focus areas were informed by extensive consultations and surveys across the country’s seven states with over 200,000 citizens, government, civil society organisations, the private sector, media and development partners.
In many respects, Nepal is starting from a clean state. While Nepal did practise a limited version of decentralisation in the early 2000s, the scope of devolution proposed by the 2015 Constitution is unprecedented. Meanwhile, reforms promise to rid the country of a legacy of exclusion based on geography, ethnicity and gender.
Over the last decade, Nepal experienced frequent government turnover and political fragmentation with a considerable toll on development. The 2017 elections mark a significant turning point, in that they offer higher hopes for political stability and policy predictability that remained elusive during most of Nepal’s recent past. This is a considerable achievement.
While the national poverty estimates await updating starting next year, at last count, poverty fell from 46 per cent in 1996 to 15 per cent in 2011 as measured by the international extreme poverty line. However, most of the poverty reduction resulted from the massive outmigration of labour, and a record increase in private remittances. Moreover, a significant disparity remains in poverty incidence across the country.
Nepal now faces the daunting task of adapting to a three-tier structure in the face of nascent and often-nonexistent institutions at the sub-national levels. Immediate challenges include the need to clarify the functions and accountabilities of the federal, state and local governments; deliver basic services and maintain infrastructure development; enable the private sector; and ensure strong and transparent governance during the early years of federalism. Meanwhile, if left unmet or unmanaged, heightened public expectations of federalism could rapidly degenerate from anticipation to disillusionment. . Nepal needs to grow in the order of at least 7 to 8 per cent and shift from remittance-led consumption to productive investment. The economy also remains exposed to exogenous shocks like earthquakes, floods and trade disruptions. These long-standing economic vulnerabilities will require far-reaching but carefully-calibrated reforms.
In Gaza, the drinking water tastes like seawater. Years of neglect and poor management, due in large part to recurring conflicts, has led to the steady depletion of Gaza’s natural aquifer. The empty aquifer has been invaded by seawater and, alarming for public health, untreated sewage. A series of droughts that struck Syria from 2006 onwards destroyed the livelihoods of millions of Syrians who relied on agriculture. The United Nations (UN) estimated that between 2008 and 2011, the drought affected 1.3 million people, with 800 000 people “severely affected.” People were forced from their land, poverty levels rose, and part of the population was plunged into deep food insecurity.
This blog is based on the report The Web of Transport Corridors in South Asia -- jointly produced with the Asian Development Bank, the United Kingdom’s Department for International Development, and the Japan International Cooperation Agency
One of the oldest, the Grand Trunk Road from the Mughal era still connects East and West and in the 17th century made Delhi, Kabul and Lahore wealthy cities with impressive civic buildings, monuments, and gardens.
In India alone—and likely bolstered by the successful completion of the Golden Quadrilateral (GQ) highway system—several transport proposals extending beyond India’s borders are now under consideration.
They include the International North-South Transport Corridor (INSTC), linking India, Iran and Russia, the Asia-Africa Growth Corridor, and the Bangladesh, China, India, and Myanmar (BCIM) economic corridor.
The hope is that these transport corridors will turn into growth engines and create large economic surpluses that can spread throughout the economy and society.
These two cities are the economic hubs of China and India respectively, two emerging global powers.
The distance between them, about 5,000 kilometers, is not much greater than the distance between New York and Los Angeles.
But instead of crossing a relatively empty continent, a corridor from Shanghai to Mumbai—via Kunming, Mandalay, Dhaka, and Kolkata—would go through some of the most densely populated and most dynamic areas in the world, stoking hopes of large economic spillovers along its alignment.
“Build and they will come” seems to be the logic underlying many massive transport investments around the world.
However, the reality is that not all these investments will generate the expected returns.
Worse, they can become wasteful white elephants—that is, transport infrastructure without much traffic—that would cost trillions of dollars at taxpayers’ expense.
First, countries need to change the mindset that transport corridors are mere engineering feats designed to move along vehicles and commodities.
Second, sound economic analysis of how corridors can help spur urbanization and create local jobs while minimizing the disruptions to the natural environment, is key to developing successful investment programs.
Specifically, it is vital to ensure that local populations whose lives are disrupted by new infrastructure can reap equally the benefits from better transport connectivity.
For instance, more educated and skilled people can migrate to obtain better jobs in growing urban areas that are benefiting from corridor connectivity, while unskilled workers may be left behind in depopulated rural areas with few economic prospects.
But while corridors can create both winners and losers, well-designed investment programs can alleviate potential adverse impacts and help local people share the benefits more widely.
In that vein, India’s Golden Quadrilateral, or GQ highway system, is a cautionary tale.
No doubt, this corridor had a positive impact.
Economic activity along the corridor increased and people, especially women, found better job opportunities beyond traditional farming.
But this success came at a cost as air pollution increased in the districts near the highway.
This is a major tradeoff and one that was documented before in Japan when levels of air pollution spiked during the development of its Pacific Ocean Belt several decades ago.
Another downside is that the economic benefits generated by the GQ highway were distributed unequally in neighboring communities.
A healthy Public-Private Partnership (PPP) has several defining features: strong competition, bankability with low financial costs, lower risk of renegotiations, secure value for money, and efficiency gains.
What does it take for countries to develop PPPs that can fit this description? Why is it that some countries such as India, Colombia, Turkey, and Egypt have been able to develop strong and successful PPP programs while others have not been able to award any projects under special-purpose PPP legislations?
Our experience with infrastructure PPPs across the globe suggests that three institutional pillars are needed to increase the probability of PPP success.