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Can “Resource Financed Infrastructure” Fix the Natural Resource Curse?

Håvard Halland's picture
Resource Financed Infrastructure
Source: Getty Images/Sam Edwards.
 

In Africa, estimates indicate that an annual investment of $93 billion is required to address the continent’s basic infrastructure needs – more than double the current level of investment.

The lack of productive investment of resource revenues, with spending of these revenues often heavily tilted towards consumption, is a critical component of the so-called resource curse, the observation that countries rich in natural resources frequently have slow long-term growth. Following oil or mineral discoveries, as the expectation of increased wealth spreads, pressures to spend typically become hard for politicians to resist, public sector salaries go through the roof, wasteful spending increases, corruption may flourish, hidden foreign bank accounts may be established, and the number of unproductive “white elephant” projects grows.

How can resource-rich countries ensure that a large share of oil, gas, and mining revenues are used for productive investment rather than excessive or wasteful consumption?

New Directions in Governance

Mario Marcel's picture

In my first mission as senior director, I am participating in an event in London this week hosted by the Governance Partnership Facility (GPF). This multi donor trust fund includes the World Bank Group, along with donors that include the UK, Netherlands, Norway and Australia. This year’s program includes perspectives from civil society and academic institutions which will further enrich our understanding of what’s important to our client countries.

Despite relatively modest resources over the past five years the GPF has played a major role in helping to build the Bank’s Governance and Anti-Corruption strategy.  The model of the trust fund is structured around four different “windows” in which competitive grant proposals are submitted by World Bank task team leaders across the different Practice Groups; these are then carefully vetted and submitted to a Steering Committee for approval.

Open Government Contracts Platform is now live!

Benjamin Herzberg's picture


More than 60 governments have committed to the Open Government Partnership (OGP), making their government data available to enable public scrutiny and citizen monitoring, and enhance government accountability. The Open Contracting community is devising Open Contracting Data Standard to enhance disclosure and participation in public contracting processes. In the U.S., the GovLab at New York University developed an OpenData500 project that has an interactive visualization of how U.S. companies are using government data for new business opportunities. It’s all a good start.

Despite all these developments on opening up data interaction, a critical question remains: how can we make sure that governments disburse public resources to those that need it most, and that public contracts are allocated in a transparent, accountable and efficient manner?

A Matter of Trust: Governance and Service Delivery in the Time of Ebola

Hana Brixi's picture
WHO team are preparing to remove dead bodies of people who died from Ebola.
"WHO logistician Jose and team are preparing to remove dead bodies of people who died from Ebola." Source: WHO

Why do people  sick with the Ebola virus in West Africa avoid public hospitals?  Or, why do children not learn basic skills in schools despite significant public investment in education? 

In response to such situations, development specialists typically call for sector-wide reforms. And the design of such reforms draws on sector policy analysis and on the assessment of service delivery arrangements and capacity. Increasingly, since the 2004 World Development Report, sector reforms also seek to make teachers, health professionals and other service providers accountable to citizens and communities.

Encouraging News on Private Sector-Led Transparency and Collaboration in China

Kerina Wang's picture
Where was the lettuce in your salad grown? How was it cultivated, sourced, packaged and distributed? How many suppliers were involved and who are they? How much energy and water did it take from growing it in the farm to serving it on your table?

These questions might not be the typical things you would contemplate when eating a salad, but rapid urbanization and changes in climate, agricultural, and food production patterns are raising a host of alarming questions for many. How is the world going to sustainably feed more than 9 billion people by 2050, when farm lands are being converted into industrial and commercial use, and extreme weather events are jeopardizing our future resources?

This is a more daunting problem for China, where under-investment in the food industry and environmental pollution have aggravated the situation. A recent official Chinese government report issued by the Ministry of Environmental Protection and Ministry of Land and Resources shows that more than 16% of China’s soil and 19.4% of farm land is polluted, according to the state news agency Xinhua.

Building Trust - Jim Kim on the Role of Governance in Poverty Reduction and Shared Prosperity

Mario Marcel's picture

The great struggle of our generation is the global fight to end poverty and build inclusive prosperity while safeguarding the Earth for those who will come after us. At its heart, this is a fight for wiser, more capable governance.”

-World Bank Group President Jim Yong Kim
Daylight Dialogue Speech, Manila, July 15, 2014
 
During a recent visit to the Philippines, World Bank Group (WBG) President Jim Yong Kim spoke about the imperative of effective governance for ending poverty. His remarks affirmed that good governance is a crucial part of the development agenda. Quoting President Aquino, President Kim also stressed that “good governance is good economics,” and applauded the Philippine government’s powerful “No Corruption, No Poverty” platform.
 
President Kim defined good governance as delivering public services effectively and efficiently; protecting citizens from violence and ensuring the rule of law; choosing wise policies and investments; maintaining public assets; fostering a transparent regulatory environment that allows the private sector to create good jobs; and directly confronting corruption so citizens have trust in institutions.
 

Measuring Corruption Risk using ‘Big’ Public Procurement Data in Central & Eastern Europe

Tina George Karippacheril's picture

In June, a joint team from Operations Risk, Public Sector Governance and Integrity and Controllers invited researchers from the Corruption Research Center Budapest (CRCB) – Mihály Fazekas and István János Tóth – for a week of discussions with Bank staff on the measurement of corruption risk in public procurement, utilizing big data.
 
CRCB is an NGO made up of an interdisciplinary team of political scientists, economists, computer scientists and lawyers. Their goal is to help citizens understand corruption in public spending and quality of government, focusing on the public procurement process. Over the past few years, CRCB have been collecting vast quantities of previously unexploited data on public procurement for some countries in Europe, sifting through these datasets to analyze risk of corruption and evidence of cartels, using a combination of quantitative and qualitative methods.

Beyond romance and nostalgia: A clear-eyed view of long term career-based incentives in the public sector

Nick Manning's picture

Teacher and studentsAs we argued in the previous post, the evidence on performance-related pay (PRP) is limited but generally supportive.   However, the evidence base for, or against, PRP is distinctively weak in relation to core civil service jobs outside of the OECD.   The conclusion of our recent report1 urges cautious experimentation, breaking out of the evidence-free certainties which have driven so many donor recommendations for reform. 

In some cases a more detailed empirical look will likely show that long term career-based incentives provide a better alternative to the short term motivation provided by PRP.  In complex public sector environments, with complex and occasionally contradictory objectives and multiple principals, there are arguments that incentives for performance should rely on information which is hard to game as it emerges over the longer term.2

Performance-related pay in the public sector: Experimentation with humility is an appropriate stance, given the state of the evidence

Nick Manning's picture

Pay Flexibility book coverA new publication on Pay Flexibility and Government Performance[1] finds that, in this area as in so many aspects of public sector management, practitioners are hampered by a lack of high quality evidence, particularly for PRP in core administrative public sector jobs.  The publication draws on a two sets of data: a review of the literature on Performance-Related Pay in the Public Sector[2] which disaggregates the available evidence by the different public sector contexts, the different types of public sector jobs, the quality of the empirical study, and the economic context; and case studies of PRP in emerging market and OECD countries, which included large perception surveys of government officials.

A related article in the World Bank Research Observer notes that this has not limited the remarkable certainty which opponents and proponents of PRP adopt concerning recommendations for reform.  Opponents march behind populist banners such as that provided by Pink[3], appealing to the idea that monetary and other extrinsic incentives are both counterproductive (because they frequently undermine intrinsic incentives) and unnecessary (because intrinsic incentives can be harnessed and used to maximize individual productivity).

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