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Private Sector Development

Chinese Lessons: Singapore’s Epic Regression to the Mean

Danny Quah's picture

Across all recorded history, 99% of humanity has never invented a single thing. Yet, it is a truth universally acknowledged that long-run sustained progress in economic well-being arises from human creativity and innovativeness. In this regard, the average human and indeed the great majority of humanity over the last seven million years provide a completely misleading guide to what is possible.

Misapplied, the Law of Averages misinforms.
 

How Ben Ali Policies Continue to Impoverish Tunisians

Antonio Nucifora's picture

Hopes are high for Tunisia’s economy to improve after Tunisians voted for a new parliament in October.  Pre-election polls consistently highlighted that the economy was the foremost preoccupation of Tunisians. Yet, political debates in the run up to the elections largely ignored longstanding economic problems.

Absurdly complex regulations divide the Tunisian economy between a protected “onshore” sector that sells to Tunisian consumers and a competitive “offshore” sector that exports, mostly to Europe. "It's pointless trying to understand the logic of it - there is no logic," says Belhassen Gherab, head of Aramys, one of Tunisia's largest textile and clothing groups.  He gives an example: "Suppose I have a machine that breaks down because one small circuit board needs replacing. If I'm an offshore company, I call up DHL and have it delivered within 24 hours. If I'm an onshore business, I'll have to bring it in through customs. I may be waiting 30 days, with my entire production halted, just for that one circuit board."

Always Regulated, Never Protected: How Markets Work

Richard Mallett's picture

If you’re not already interested in livelihoods, you should be. Because livelihoods are the bottom line of development. Millions are spent on trying to build more effective states around the world, but development isn’t really about state capacity. At the end of those long causal chains and theories of change, there’s a person – an average Jo (sephine), a ‘little guy’. Making things work a little better for that person, making it easier for them to make their own choices and carve out a decent living…that is the why of development.

Why Should we Worry about Russia’s Low Growth?

Birgit Hansl's picture

Facade of a housing estate For 2014, we project that Russia’s economy will grow at an estimated 0.3-0.5 percent. This is the lowest growth rate since the global financial crisis but higher than the high-risk case scenario which was expected since the geopolitical tension started and the sanctions of the EU and the US took hold. This means that Russia’s expected economic performance in 2014 will be similar to that of the Euro-zone, even though Russia is much more dependent on the European market than the EU is on Russia.

Why More Corruption Created Fewer Problems for Companies?

Sebastian Eckardt's picture

A Ukrainian paradox
 
Kremenchug Hydroelectric Power PlantVZ-UK002 When Ukrainians took the streets in the winter of 2013/14, protests – sparked by the then Government’s decision to suspend the signing of the association agreement with the EU – reflected widespread discontent over deep-seated corruption. From its independence over two decades ago, Ukraine has struggled with corruption and state capture.  So-called oligarchs dominate large sectors of the Ukrainian economy, extracting rents and controlling the state through direct representation in the Parliament. This allowed oligarchs to tap into rich sources of corruption, including energy subsidies, discretionary public procurement, privatization of state assets and wide spread tax fraud and evasion. These governance failures created an economy largely built around redistribution of rents. Arguably, this accounts for much Ukraine’s dismal economic performance despite an abundance of natural resources, qualified human capital and a strategic location in the center of Europe.

Why Serbia Needs to Start its Export Engine

Dusko Vasiljevic's picture
Also available in: Српски

City square in Belgrade This is the story of a country located next to the largest and most connected economic block in the world, with fairly low labor costs and a relatively well educated workforce. You would expect that country to do well. However, the state of Serbia’s economy is problematic. Today, Serbia’s output is below what it was in the 1980s (in the time of Yugoslavia) and only half of its working age population has a job in the formal sector.

At the heart of Serbia’s problems are two interconnected imbalances, which explain why the country appears to be stuck on its path to prosperity. First, the economy is running on domestic consumption, which was fueled by financial inflows since 2000, while exports remain well below potential. Second, employment is driven by the state, not the private sector, with almost half (45%) of all formal jobs in the government or State Owned Enterprises.

When Good Is Not Good Enough for 40 Million Tanzanians

Jacques Morisset's picture

Laborer working on an irrigation project. TanzaniaTanzania has undoubtedly performed well over the past decade, with growth that has averaged approximately 7% per year, thanks to the emergence of a few strategic areas such as communication, finance, construction and transport. However, this remarkable performance may not be enough to provide a sufficient number of decent or productive jobs to a fast-growing population that will double in the next 15 years. With a current workforce of about 20 million workers and an official unemployment rate of only 2%, the challenge for Tanzanians clearly does not lie with securing a job. Rather, it is to secure a job with decent earnings.

From Paper to Practice: How Easy Is It to Ease Doing Business

Borko Handjiski's picture

A storefront that specializes in nuts The stroke of the pen is powerful indeed; it has led to wars, peace, and lots of other things in between, including changes in a country’s business environment. A large part of what defines the environment for doing business in a country is set in legislation. In many countries around the world, business regulations are more difficult than necessary, and some have taken great efforts to remove unneeded impediments with the aim of stimulating entrepreneurship and investment.

Tariffs for Standards?

Hassan Zaman's picture

Bangladesh Duty- and quota-free access for exports to global markets is something developing country trade negotiators have demanded for years.  Few other “stroke-of-the-pen” measures could boost employment and reduce poverty in low income countries in such large numbers. For instance  if the US removed tariffs on Bangladeshi garments – which average around 13%, but for some items are as high as 33% – then exports to the US could rise by  $1.5 billion from the FY13 level of $5 billion, in turn generating employment for at least an additional half a million, primarily female, workers.[1]  Examples of other countries facing US tariffs include Cambodia (12.8% average tariff rate on its exports to the US), India (4.01%), Indonesia (5.73%), and Vietnam (7.41%). Progress in trade facilitation would likely have even greater pay-offs to growth and employment, but these require structural reforms and investments, while the decision to remove tariffs is a simpler, “stroke-of-the-pen” measure.

Africa's McTipping Point?

Borko Handjiski's picture

Three quarters of a century since the opening of the first McDonald’s, the fast food chain operates around 34,000 outfits in around 120 countries and territories across all continents. In Sub-Saharan Africa (SSA), however, – a region of 48 countries and almost a billion people - only South Africa and Mauritius have been able to attract this global food chain.
 
This peculiarity cannot be explained only by the fact that the region is poor. The company has found a market in about 30 countries with GDP per capita of less than US$ 3,000 (in constant 2005 US$) at the time of their first McDonald’s opening. Hamburgers, Cheeseburgers, and Big Macs are also on offer in a dozen of low-income countries as well. When the first McDonald’s opened in Shenzhen in 1990, China’s GDP per capita was less than US$ 500 per person. Of course, Shenzhen’s per capita income was several times higher, but the company has also found a market in Moldova since 1998 when the GDP per capita of the 3 million person country was less than US$ 600 per capita. There are many cities in SSA today that have higher income, population concentration, and tourists than what Chisinau had in 1998; yet they do not have a McDonald’s. As a matter of fact, 22 SSA countries today have higher income per capita than what Moldova or Pakistan had when the first McDonald’s opened there, and 15 of them have higher income per capita even than what Indonesia or Egypt had at their McDonald’s openings (see chart).

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