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Public Sector and Governance

Announcing the winners of the 2018 #OneSouthAsia Photo Contest

World Bank South Asia's picture


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.

Pulling out all stops: World Bank in Nepal

Faris Hadad-Zervos's picture

Nepal

Few countries in recent history have experienced change on a scale as sweeping as Nepal – that too, in the span of a single generation. 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.

Finance Minister Yuba Raj Khatiwada's Vision for Nepal's Future


The CPF is designed to balance support to Nepal’s transition to federalism with its quest for higher growth, sustained poverty reduction and inclusive development. 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.

Interview with World Bank Country Director for Nepal, Qimiao Fan


Nepal has achieved a remarkable reduction in poverty in the last three decades, but the agenda remains unfinished. 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.

Compared to the average 4.5 per cent of GDP growth over the last decade, Nepal needs to achieve faster growth to meet its coveted goal of attaining middle-income status by 2030. 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.

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.
 
Short Take: Nepal Country Partnership Framework (FY2019-23)

South Asia’s transport corridors can lead to prosperity

Martin Melecky's picture
 World Bank
Transport corridors offer enormous potential to boost South Asia’s economies, reduce poverty, and spur more and better jobs for local people, provided the new trade routes generate growth for all and limit their environmental impact. Credit: World Bank

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

No doubt, South Asia’s prosperity was built along its trade routes.

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.

Fast forward a few centuries and today, South Asia abounds with new proposals to build a vast network of transport corridors.
 
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.

Arguably, the transport corridor with the greatest economic potential is the surface link between Shanghai and Mumbai.
 
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.
 
So, how can South Asia develop transport corridors that have a positive impact on their economies and benefit all people along the corridor alignments and beyond?  
 
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.
 
The hard truth is that the development of corridor initiatives may involve difficult tradeoffs.
 
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.  

Bringing Sri Lanka's traders one step closer to the global market

Marcus Bartley Johns's picture
Making trade more efficient in Sri Lanka
The recently launched Sri Lanka Trade Information Portal is a one stop shop for traders. Photo Credit: Joe Qian/World Bank

Sri Lanka’s traditional lacework famously known as Beeralu is slowly moving into the spotlight of the global fashion industry. Udeni, who is a traditional Beeralu lace maker from Galle, learned the technique from her mother and developed it into a part-time business. 

At the moment, she sells to buyers from Colombo who then sell her product internationally. She would like to export directly one day, but for the time-being, she must rely on “middlemen” because of the complexity of the export process. A major barrier is the lack of information on what government procedures apply in Sri Lanka before her product can even reach a foreign buyer. 

Being unable to access information related to export and import procedures isn’t just a problem for entrepreneurs like Udeni, but a significant barrier for the entire Sri Lankan trading community. In a recent set of interviews conducted by the World Bank, every business interviewed said that personal experience was the leading source of information on import and export procedures. Only half said that they turn to government agencies for information, with concern expressed that the little information available online is often out of date, and spread across many websites. 

Has Bhutan’s growth been jobless?

Tenzin Lhaden's picture
Bhutan's youth unemployment rate has increased from 10.7 percent in 2015 to 13.2 percent in 2016
Bhutan continues to maintain solid growth and macroeconomic stability but job creation is lagging; its  youth unemployment rate has increased from 10.7 percent in 2015 to 13.2 percent in 2016. This indicates that high growth has not been able to generate enough jobs for youth. 

“The main driver of growth in Bhutan continues to be the hydropower sector, but electricity generation does not create job,” said a senior government officials attending the presentation of The World Bank’s South Asia Focus on Jobless Growth on June 28th in Thimphu. The report was presented by Martin Rama, World Bank South Asia Region Chief Economist and was attended by senior government officials, parliamentarians and development partners. The presentation alongside the launch of Bhutan Development Update was a great opportunity for the policy makers to better understand and synthesize Bhutan and the South Asia region’s development opportunities.

In the case of Bhutan, it seems clear that growth alone will not allow it to attain higher employment rates as enjoyed by some other developing countries.

"More than 1.8 million young people will reach working age every month in South Asia through 2025 and the good news is that economic growth is creating jobs in the region,” said Martin Rama,. “But providing opportunities to these young entrants while attracting more women into the labor market will require generating even more jobs for every point of economic growth.”

The report informs that the fall in employment rates has been much faster in the region particularly in India, Bhutan and Sri Lanka and especially for women, risking foregoing the demographic dividend. While it is evident that the number of working age people is increasing, the proporation who are at work has declined owing to prioritization of the households to education, health and other commitments with increasing level of income.

Electrocracy in India: power of, by, and for the people

Amit Jain's picture
India Solar
To boost India’s solar rooftop program, the World Bank has partnered with the Government of India to provide $648 million to place solar panels on rooftops across the country.

Solar energy is not just for the elite and wealthy. Today, with growing numbers of people taking power generation into their own hands, solar energy has become the world’s most democratic source of power - of the people, by the people, and for the people. However, the pathway to this goal requires a fundamental paradigm shift in the power sector – one in which more and more people take “power” generation into their own hands.
 
In the words of environmentalist and author Ross Gelbspan, “A common global project to rewire the world with clean energy could be the first step on a path to global peace and global democracy -- even in today's deeply troubled world.”
 
In Germany, solar rooftops have already set off a transformation. Home to more than 1.7 million citizen-owned solar power systems, Germany now accounts for almost one-fourth of the world's PV capacity. Armed with solar rooftops and smart battery storage, German households have turned into energy producers, are paying lower utility bills, and are fast approaching energy independence.  
 
In California too, solar rooftops have taken center stage. The state is the first in the U.S. to require solar panels on almost all new homes. And as solar rooftop installations rise, domestic storage systems are simultaneously being developed to keep pace. Tesla's Powerwall, for example, enables users to store solar power generated during the day for use at night when the sun goes down.
 
As the world’s third-largest producer of conventional energy, India too is now rapidly expanding its capacity to generate solar power. The country has set itself an ambitious target of generating 100 GW of solar power by 2022. Today, solar power has emerged as the cheapest source of energy in India, at prices that are a fraction of grid power. In fact, India’s 100 GW solar target, of which 40 GW is to come from rooftop solar, will play a key role in providing 24 X 7 sustainable, affordable, and reliable electricity to 300 million people. Currently, however, only some 2 GW of this 40 GW target has been installed.
 
To boost India’s solar rooftop program, the World Bank has partnered with the Government of India to provide $648 million to place solar panels on rooftops across the country. The program has financed 600 MW in rooftop solar installations so far, of which 80 MW has already been installed.

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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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.   

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.

Six ways Sri Lanka can attract more foreign investments

Tatiana Nenova's picture
In 2017, Foreign Direct Investment (FDI) into Sri Lanka grew to over $1,710 billion. But Sri Lanka still has ways to go to attract more FDI.
In 2017, Foreign Direct Investment (FDI) into Sri Lanka grew to over $1,710 billion. But Sri Lanka still has ways to go to attract more FDI. Credit: Shutterstock 


To facilitate Foreign Direct Investment (FDI), Sri Lanka launched last week an innovative online one-stop shop to help investors obtain all official approvals. To mark the occasion, this blog series explores different aspects of FDI in Sri Lanka. Part 1 put forth 5 Reasons Why Sri Lanka Needs FDI. Part 3 will relate how the World Bank is helping to improve Sri Lanka’s enabling environment for FDI.

Sri Lanka and foreign investments read a bit like a hit and miss story.

But it was not always the case.

Before 1983, companies like Motorola and Harris Corporation had plans to establish plants in Sri Lanka’s export processing zones. Others including Marubeni, Sony, Sanyo, Bank of Tokyo and Chase Manhattan Bank, had investments in Sri Lanka in the pipeline in the early 1980s.

All this changed when the war convulsed the country and derailed its growth. Companies left and took their foreign direct investments (FDI) with them.

Nearly a decade after the civil conflict ended in 2009, Sri Lanka is now in a very different place.

In 2017, Foreign Direct Investment (FDI) into Sri Lanka grew to over $1,710 billion including foreign loans received by companies registered with the BOI, more than doubling from the $801 million achieved the previous year.

But Sri Lanka still has ways to go to attract more FDI.
 
As a percentage of GDP, FDI currently stands at a mere 2 percent and lags behind Malaysia at 3 – 4 percent and Vietnam at 5 – 6 percent.

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