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China’s local government debt—what is the problem?

Louis Kuijs's picture

China’s massive stimulus spending has raised widespread concerns about local government finances. Local governments have ramped up infrastructure spending since late 2008, while they are also under pressure to spend more on health, education, and social security, for which they are in large part responsible. With monetary conditions likely to become tighter this year and land revenues possibly slowing down or even declining, local government finances may become strained.
At the heart of the concerns are local government investment platforms. These are state-owned-enterprise (SOE)-type entities set up to finance infrastructure construction and urban development—sometimes also called Urban Development and Construction Companies. Set up in part to circumvent rules prohibiting local governments from borrowing, their investment activities are mainly financed by land sale revenue and bank financing, often using as collateral land requisitioned from local residents.

The winds of change are blowing in Malaysia

Philip Schellekens's picture

The winds of change are blowing in Malaysia, as the government is taking on an ambitious agenda of structural reform. The objective is to climb up the income ladder and join the league of high-income economies. This is a difficult challenge – one which not many countries have successfully met in the post-war period.

Against this backdrop, the World Bank’s launch of a new report on the Malaysian economy (full disclosure: I lead the team who authors the report) is timely. The Malaysia Economic Monitor, which will be published twice a year, aims to provide context to the challenges facing Malaysia and serves as a platform for discussion and the sharing of knowledge.

China's engagement in Africa increases – and so does the debate around it

Philip E. Karp's picture

The issue of China-Africa engagement has been in the headlines this week as leaders from China and from across the African continent gathered in Egypt for the Fourth Heads of State Summit of the Forum on China-Africa Cooperation (FOCAC) where Chinese Premier Wen Jiabao announced China’s latest round of

Interactive climate change map shows what a warmer world could look like

James I Davison's picture

As next month’s climate change conference in Copenhagen draws closer, we are undoubtedly going to see the amount of online discourse on the topic continue to increase. The latest example comes from the British government, which last week released an interactive map showing the possible impact of a global temperature rise of 4 degrees Celsius (7 degrees Fahrenheit). An article in the Guardian says the UK’s Met Office Hadley Centre produced the map based on a recent study that indicates, "such a 4C rise could come as soon as 2060 without urgent and serious action to reduce emissions." The newspaper also quotes the government’s chief scientist as saying that such a temperature shift would be “disastrous.”

Indeed, after exploring the map for just a few minutes, you see how devastating the consequences of a warmer planet might be. By zooming in and clicking and dragging with your mouse, you can navigate the map to see what could happen to different parts of the globe. Be sure to click on some of the plus signs, which give you a brief overview of an issue and the option to click to learn more and view sources of the research. The map, its creators say, displays the latest in peer-reviewed climate change research.

Looking around East Asia, you’ll see that some of the impacts listed include decrease in rice yield, extreme temperatures in population centers of eastern China, and flooding caused by rising sea levels.
 

Click on the map to interact. View full screen map here.


(Hat tip: From Poverty to Power blog.)

Improving investment climate important to boost economic growth in Thailand

Xubei Luo's picture

The investment climate is the fundamental socio-economic framework in which firms operate – the macroeconomic and trade policies they face, the labor and financial markets in which they recruit and raise money, the available infrast

Imagine a new Indonesia: Spending to improve development

Wolfgang Fengler's picture

Imagine how the new Indonesia would prosper if everyone had affordable health insurance, every child completed secondary education and highways were in place connecting Indonesia’s three biggest cities: Jakarta, Surabaya and Medan.

Indonesia's $100 billion budget: Is debt an issue?

Wolfgang Fengler's picture

I have received many encouraging responses to my first blog. Thank you. This time, let's look at Indonesia's budget. Last year, Indonesia's budget reached the magical threshold of US$100 billion.

Mongolian government takes action to support small businesses (or Inspections Gone Wild)

David Lawrence's picture

 

Restaurants in Mongolia can face fines for not having the right number of forks.
Mongolia's done a good job in reforming its business environment since the collapse of communism in the early 1990s. In Doing Business 2009, the country ranked 58th out of 181 economies and outperformed its neighbors, Russia and China, by significant margins. Well done. But that doesn't mean that things are easy for small businesses here. The overall business environment is a serious drag on Mongolia's development prospects, and the situation keeps getting worse as the financial crisis sinks its claws into the economy.

One area fully in Government control is business inspections. This is an important function: inspections protect the health and safety of the general public. But when inspections run wild, they can become a major burden to businesses, especially small ones. Inspections can impose large costs on businesses in terms of time and money, encourage firms to bribe their way out of violations, and even encourage entrepreneurs to operate in the shadows. That means less tax revenue and potentially dangerous products and services being offered to the public.

Is this a problem in Mongolia? Absolutely.

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