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Public Sector and Governance

From Imitating to Innovating

Marcin Piatkowski's picture

Time to Change Gears for Poland’s Economy

Poland is Europe’s growth champion. It has more than doubled its GDP per capita since the beginning of post-socialist transition in 1989, consistently growing since 1992, and was the only EU economy to avoid a recession in 2009. Poland is a prime example of the success of the European “convergence machine”. In 2014, the level of income adjusted for purchasing parity exceeded $24,000 and reached almost 65% of the level of income in the euro zone, the highest absolute and relative level since 1500 A.D.
 
However, past successes do not guarantee a prosperous future and Poland cannot afford to grow complacent. Given the significant productivity gap—Poland’s productivity per hour amounts to less than half of that in Germany —technology absorption will continue to drive private sector productivity in the near term, but it is unlikely to help sustain—not to mention accelerate—economic growth in the long term as Poland moves closer to the technology frontier. Investment in private sector R&D and innovation will have to increase far more rapidly. Growth can stagnate if Poland doesn’t start shifting from imitating others to generating new ideas, from quantity to quality, and from potato chips to microchips.

Future Development Forecasts 2015

Shanta Devarajan's picture

Despite their mixed record last year, Future Development's bloggers once again offer their predictions for 2015.  Eight themes emerge.
 
1. Global growth and trade. The US economy will strengthen far above predictions. Together with lower oil prices and a better business climate in emerging markets, this will create substantial positive spill-overs, including to the smaller export-oriented Asian economies, boosting the growth of their manufactured exports well above recent trends. The US will look to open new free trade agreements in Asia—India may try to join—and seek opportunities to do the same in Africa. Meanwhile, Germany will face increasing resistance to the free-trade agreement with America (TTIP), just as Angela Merkel celebrates her 10th year in office.

How Well did We Forecast 2014?

Shanta Devarajan's picture

A year ago, we polled Future Development bloggers for predictions on the coming year (2014).  Looking back, we find that many unforeseen (and possibly unforeseeable) events had major economic impact. 

We missed the developments in Ukraine and Russia, the spread of the Islamic State in Iraq, the outbreak of Ebola in West Africa, the collapse in oil prices and their attendant effects on economic growth.  At the same time, we picked the winner of the soccer World Cup, and got many of the technology trends right. Perhaps economists are better at predicting non-economic events.

Here’s the scorecard on the seven predictions made:
 

Can Pay for Performance Provide the Wrong Incentives?

Tito Cordella's picture

Office workers in a meeting The use of technology to improve productivity continues to evolve. In Modern Times, Tramp had to keep up with the crazy pace of the assembly line; in contemporary public administrations, employees have to comply with what is mandated by monitoring and reporting technologies; in today’s World Bank — I’m exaggerating a bit — we are asked to record everything we do in the multiple Bank systems. A legitimate question to ask is whether the reliance on monitoring and reporting technologies improves service delivery or, instead, whether it forces motivated civil servants or employees to waste time “feeding the beast”.

The Impact of Falling Oil Prices

Birgit Hansl's picture

 Notes from Russia and Kazakhstan

Petrol tanker driving along the rural road in Russia Oil prices tumbled dramatically since July when they reached US$115 per barrel to below US$65 per barrel in recent days. Despite the sharp price decline, OPEC signaled no intention to cut production.  The oil market remains well-supplied and there is demand-driven pressure on oil prices, following weak economic data from the Euro zone and a number of emerging economies, including Turkey, Brazil, Russia, and China which means that the oil price could fall even further and remain low for longer.

The economic prospects of many resource abundant economies are tied to oil prices. Russia and Kazakhstan are two extreme cases. Such dependency translates into volatility of export receipts and government revenues and, depending on the exchange regime, to a decline in the national currency. For Russia, oil and gas provide about 70 percent of its exports and 50 percent of its federal budget. In Kazakhstan, oil revenues constitute about half of government’s total revenues and 45 percent of foreign exchange earnings.

Lessons from Reducing Energy Subsidies

Mamta Murthi's picture
Also available in: Română

A view from Central Europe and the Baltics

Energy subsidies are common throughout the world.  The bulk of subsidies are paid in the Middle East and North Africa where my colleague, Shanta Devarajan, has eloquently blogged about their corrosive impact on economic growth, on employment, on human health and on water conservation.  Where I sit, in Central Europe, many countries are in the process of liberalizing their market for energy and bringing subsidies to an end.  What lessons does the experience of energy price liberation in this group of countries offer to their neighbors in the south?  Based on the work of my colleagues, Nistha Sinha and Caterina Ruggieri, I would draw five lessons.

Are Institutional Births Institutionalizing Deaths?

Jishnu Das's picture

On November 12th in the Indian state of Chhattisgarh, twelve women who had received tubal ligations died. The tragic incident highlights the unfortunate reality that for many people around the world, hospitals and clinics may not satisfy the most basic assumption that visiting them will make you better. Equally worrying is the Indian government’s singular focus on increasing ‘institutional deliveries’ and family planning that led it to celebrate a surgeon who had performed 100,000 sterilizations, now spending no more than 4 minutes on each “case”.
 

Corrosive Subsidies in MENA

Shanta Devarajan's picture

Air pollution in Cairo Half the world’s energy subsidies are in the Middle East and North Africa Region.  These subsidies have been criticized on grounds that they crowd out public spending on valuable items such as health, education and capital investment.  Egypt for instance spends seven times more on fuel subsidies than on health.  Furthermore, the allocation of these subsidies is heavily skewed towards the rich, who consume more fuel and energy than the poor.  In Yemen, the portion of fuel subsidies going to the richest quintile was 40 percent; the comparable figure in Jordan was 45 percent and in Egypt, 60 percent.
 

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."

Is Burkina Faso facing its Golden Hour?

Todd Moss's picture

One of my favorite books about the World Bank is Michael Holman’s Last Orders at Harrods. It’s a satirical novel about trouble brewing in a fictional Kenya during the visit of the World Bank President Hardwick Hardwicke (and his sidekick speechwriter, Jim “Fingers” Adams). What’s great about Holman’s book is that the author, a former Africa editor at the Financial Times, shows in a humorous manner how the Bank interacts with clients and how the view from Washington can sometimes be oblivious to what’s really going on in the country.
 
I’ve tried to follow in Holman’s footsteps with The Golden Hour, my new thriller about a State Department crisis manager fighting chaos in West Africa and bureaucracy in Washington DC. The hero Judd Ryker has just 100 hours to reverse a coup in Mali, rescue a kidnapped Peace Corps volunteer, and save the U.S. embassy from a terrorist attack. In the novel, shifting forces in Bamako and competing interests at headquarters conspire to shield the truth and complicate resolution.  Ryker’s first task is simply to figure out what’s really going on.

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