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.
‘Conversable Economist,’ the blog of the Journal of Economic Perspectives, has a post by Timothy Taylor titled ‘Focusing Behavioral Economics on Development Professionals’ that reviews the WDR 2015.
David Brooks of the NYT opines about the new WB report in ‘In Praise of Small Miracles’ and from the tone of the comments his enthusiasm for ‘Mind, Society, and Behavior’ has ruffled the feathers of conservatives and liberals alike.
In the past year, attention has focused on the World Bank Group's (WBG) work in fragile and conflict affected states (FCS) in two distinct ways. First, the Independent Evaluation Group released its report on the work of the WBG in these countries. Second, within this first year of change at the WBG, Fragility, Conflict and Violence is identified as one of the five thematic groups that cut across the development efforts of the institution. The FCS team, aims, among other things, to ensure a mainstreaming and strategic approach in all fragile states.
There is little doubt that, with more than 1.5 billion people living in countries affected by violent conflict, and with around twenty percent of the world’s poorest people living in fragile and conflict-affected situations (FCS), achieving the twin goals of ending poverty and boosting shared prosperity will have to require progress not only in middle income or even lower income client countries, but also in the most vulnerable client countries.
The limited availability of data on poverty and inequality poses major challenges to the monitoring of the World Bank Group’s twin goals – ending extreme poverty and boosting shared prosperity. According to a recently completed study, for nearly one hundred countries at most two poverty estimates are available over the past decade.Worse still, for around half of them there was either one or no poverty estimate available.* Increasing the frequency of data on poverty is critical to effectively monitoring the Bank’s twin goals.
Against this background, the science of “Big Data” is often looked to as providing a potential solution. A famous example of this science is “Google Flu Trends (GFT)”, which uses search outcomes of Google to predict flu outbreaks. This technology has proven extremely quick to produce predictions and is also very cost-effective. The rapidly increasing volumes of raw data and the accompanying improvement of computer science have enabled us to fill other kinds of data gaps in ways that we could not even have dreamt of in the past.
For a variety of reasons, economists have avoided getting too closely involved with the concept of culture and its relationship to economic development. There is a general acceptance that culture must have a role in guiding a population along a particular path, but, as Landes (1998) points out, a discomfort with what can be construed as implied criticism of a particular culture has discouraged broader public discourse.
As we discuss in a recent paper, the role of culture in economic development is not an easy subject to get a handle on. To start with, one faces issues of definition. The more all-encompassing the definition, the less helpful it tends to be in explaining patterns of development. Economists tend to narrowly define culture as “customary beliefs and values that ethnic, religious, and social groups transmit fairly unchanged from generation to generation” (Guiso, Sapienza and Zingales, 2006). This approach is largely dictated by the aim to identify causal relationships, by focusing on aspects of culture that are constant over time. Not surprisingly, some of the most insightful writing on the subject has been done by anthropologists. Murdock (1965) argues that a culture consists of habits that are shared by members of a society. It is the product of learning, not of heredity. Woolcock (2014) highlights how the sociologic scholarship has evolved to consider culture as “shaping a repertoire or ‘tool kit’ of habits, skills, and styles from which people construct ‘strategies of action” (Swidler, 1986, p.273).
English settlers to the New World believed that the climate of Newfoundland would be moderate, New England would be warm, and Virginia would be like southern Spain. These beliefs were based on the seemingly common sense view that climate is much the same at any given latitude around the globe.
What is striking is that these views persisted despite mounting evidence to the contrary. As late as 1620, after 13 years in the settlement, residents in Jamestown, Virginia, were still trying to import olive trees and other tropical plants, perhaps inspired by Father Andrew White, who had assured them that it was “probable that the soil will prove to be adapted to all the fruits of Italy, figs, pomegranates, oranges, olives, etc.” Eventually, the English settlers did adjust their mental models about North American climate. The accumulation of scientific data, combined with personal experience, was undeniable. But the adjustment was slow and costly, in terms of both money and lives lost.
At 23, starting graduate school for international relations, the prospect of taking economics frightened me. Having just spent my college career as a history major that marched for peace probably had something to do with it. There was also that time in 4th grade when I got a D in math, but we won’t go there.
Anyway, it was a very nice surprise when I found that the math and logic of economics made sense to me. I was proud of myself for “getting it.” And of course, for starting my own subscription to the Financial Times. Ah, the conspicuous consumption patterns of a newly-minted student of economics.