Note from Let's Talk Development Editors: Co-authors Michael Keen and Ian Parry were not mentioned in an earlier version of this blog post, this has been corrected.
The central focus of climate talks that concluded last year in Lima has been on building wide agreements to restrict national emissions of greenhouse gases. But some important emissions are hard to allocate to individual nations: Those from international aviation and shipping. These currently constitute about 4% (and rising) of global carbon emissions, and are subject to almost no charges. This current state reflects heavy resistance to such charges, from industry and many governments, but also tax competition: Taxing these sectors by any one country can be hard due to their geographic mobility and international nature.
The World Bank Group’s Enterprise Surveys (ES) evaluate the quality of the business environment in an economy by asking a series of questions that capture both the experiences and perceptions of firms. These surveys provide much needed information, particularly in developing countries where firm-level data about what businesses experience are limited.
The Djibouti Enterprise Survey is the first-ever ES in the country and consists of 266 firms in Djibouti City across three sectors – manufacturing, retail, and other services. Firms interviewed for the ES are formal, private-sector firms operating in non-agricultural, non-extractive private sector with five or more employees.
Africa is fortunate. Unlike more industrialized countries and even some industrializing countries like China, Africa is endowed with a much younger population. This could offer a tremendous comparative advantage in years to come that could propel the continent forward as a dynamic and productive engine of growth for the entire world. As elucidated by the UNFPA, “A window of economic and social growth occurs when the working age population becomes larger than people of non-working age…” making significantly higher growth rates possible as “the state faces fewer costs associated with children and the elderly”. But for Africa to realize this advantage, it needs two things: investment to create good jobs, and the young people with the skills to fill them.
According to the United Nations, persons between 15 and 24 comprise a fifth of the world’s population with the vast majority living in developing countries . But, at present in Africa, this cohort accounts for almost two thirds of the unemployed. While there has been no shortage of initiatives to tackle the youth “issue”, these have been at the social margin with mixed results. Policy reforms and donor support have included both supply and demand side activities, mostly directed to investment in public services complimentary to the private sector which, while necessary, have not been sufficient.
Why do emerging market policymakers complain both when their currencies appreciate and when they depreciate? Why do they march behind the Brazil’s Finance minister’s denunciation of the Fed’s QE as an act of “currency war” and, a few months later, behind the India central bank governor’s condemnation of the possible withdrawal of the very same QE? Why is it that the introduction of the euro may have made it more difficult for peripheral European countries to bounce back from recessions? What do Argentina, Indonesia, Brazil and Sweden have in common? Is the euro more similar to the old French Franc, Deutsche Mark or, God forbid, the Italian Lira? The answers to these apparently unrelated questions may lie in a little studied characteristic of currencies, their behavior over the business cycle.
I really don’t like indices, particularly those that claim to measure what are termed “social issues”. And they seem to be everywhere. Ok, the Human Development Index did a lot to push countries to do more on health and education, and its rankings serve to pit countries in good competition with each other. Single measures are also intuitive and easy for monitoring purposes.
Just to stop my initial train of thought here, I have two problems with indices that measure “well-being”: first, they are often weighted and the weights assigned to individual components expose the subjectivity of their creators. If you think primary education is more important than reproductive health, and you assign weights that way, that’s what your index will pick up.
- Social Development
One of the primary goals of the Enterprise Surveys (ES) is to provide high quality data about the business environment based on the experiences of firms. Given how little is known about the private sector in developing economies, this provides much needed information.
The recently released Turkey Enterprise Survey consists of 1344 firms across seven regions and nine business sectors. Firms interviewed for the ES are formal private firms operating in non-agricultural, non-extractive private sector with five or more employees. In this post we will focus on a few highlights for the standard ES firms.
Despite the fact that many governments give incentives and tax benefits to attract foreign direct investments (FDI), empirical studies on Venezuela, Czech Republic and Central and Eastern Europe have consistently shown that FDI crowd out and take away market opportunities from domestic enterprises and make the domestic firms less efficient. However, it could be that not all FDI firms are alike, particularly when only some FDI use local intermediate inputs and have strong backward linkages.