Syndicate content

Transport

Life in the Slow Lane - The Nairobi Grind

Apurva Sanghi's picture

I’ve lived in cities famed for their gridlock: 1990s Bangkok (gridlock was as bad as it could be); Los Angeles (gridlock + pollution); New Delhi (gridlock + pollution + honking galore); Nairobi’s gridlock is surely up there.

But is traffic “bad”? What sort of question is that you ask? Surely, the answer is 'yes', you say: time wasted stuck in traffic, the frustration, the needless idling of vehicles which creates both local (and global) pollution and so on. But let me suggest this: traffic congestion is also a sign of development. In fact, the more vibrant and dynamic the city as Nairobi surely is, the more traffic congestion you might expect...to paraphrase Gordon Gekko from the movie Wall Street, “Traffic is…good”!

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.
 

FIAT-Serbia: Industrial Policy Trailblazers?

Wolfgang Fengler's picture
Also available in: Српски
 

In the 1970s and early 1980s my family’s yearly vacation trip from Southern Germany to Greece involved a grueling 36 hour trek through the infamous “Auto-put”: Maribor-Ljubljana-Zagreb-Belgrade-Nis-Skopje-Evzoni. The trip was hazardous, always an adventure. To fill our car in “socialist Yugoslavia”, we had to buy gasoline vouchers upfront at the border.

We drove a Fiat 132 which served us well during these long road trips. These memories came back to me when a World Bank team recently visited the brand new FIAT car factory in Kragujevac, two hours South of Belgrade. This is a high stakes investment for FIAT and a strong signal for Serbia’s dormant manufacturing. The factory is producing the new 500L (in several different variants), a modernized version of its legendary Cinquecento. Early this October, the company and the factory celebrated the first anniversary of the 500L’s regular production. During that year, some 100,000 units were produced, overwhelmingly for export around the world, including to the USA. As a result FIAT is now Serbia’s largest exporter (over a billion euros’ worth -15% of total exports of goods from Serbia- in the first three quarters of 2013 ). Just two years before, exports of vehicles amounted to 2% of total exports (see figure).  Today, Kragujevac is producing 600 cars daily and has created more than 3,000 jobs with the potential for more. Importantly, a network of suppliers is springing up, both in Kragujevac, as well as in other towns in Serbia.

Disrupting Low-level Political Equilibria

Shanta Devarajan's picture

Absentee teachers, negligent doctors, high transport costs, missing fertilizers, and elite-captured industrial policy all stand in the way of poor people’s escaping poverty.  While the proximate reason for these obstacles may be a lack of resources or an erroneous policy, the underlying reason is politics. Lawmakers meet during a session of Parliament in Accra

- In many developing countries, teachers run the political campaigns of local politicians, in return for which they are given jobs from which they can be absent.  The situation can be described as an equilibrium, where the candidate gets elected and re-elected, and teachers continue to be absent.  The losers are the poor children who aren’t getting an education.  The equilibrium has no intrinsic force for change, especially if, as in Uttar Pradesh, India, 17 percent of the legislature are teachers.

 - High transport costs in Africa are due not to poor-quality roads (vehicle operating costs are comparable to those in France) but to high prices charged by trucking companies, who enjoy monopoly power thanks to regulations that prohibit entry into the trucking industry.  High transport prices and monopoly trucking profits are an equilibrium. In one country, the President’s brother owns the trucking company, so prospects for deregulation there are grim.

- Several countries subsidize fertilizer, sometimes to the tune of several percentage points of GDP, only to find that it fails to reach poor farmers.  Thinking that the problem is the public distribution system, some governments have tried to use the market to allocate fertilizer, by giving farmers vouchers that they can redeem with private sellers.  A scheme in Tanzania found that 60 percent of the vouchers went to households of elected officials. When subsidies are captured to this extent by political elites, their reform will be resisted—another equilibrium.