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Students and Stagnation: What Strategies for Growth?

Ivan Rossignol's picture

In the last couple of days, I was struck by two pieces of news. They were small but surprising, and both affect the way we think about how to strengthen an economy in a developing country.
 
One news item concerned shifting intellectual currents. Faculties of economics in seven cities announced last week that they will be revising their curriculum. They are responding to demands from students, such leading academics as Joseph Stiglitz and such policymakers as Andy Haldane at the Bank of England. Their goal is to reduce the dominance of neoclassical models and to have economics courses that will focus on the real-world responses to financial crises, inequality and other problems. This is no ordinary student rebellion: On Friday, the Financial Times published an editorial in their support. On the heels of Ha Joon Chang’s book launch (“Economics: The User’s Guide”), I found this news interesting. Is there one way to look at an economy, and can we afford to rally behind one school of thought?
                                                                                                                         
The other story was more depressing.  It concerned what former U.S. Treasury Secretary and former Harvard President Larry Summers and others are calling “secular stagnation.”  It showed that U.S. firms’ net capital expenditure was the exact same in 2013 as it was in 2000. So, even smoothing out the global financial crisis, even in the largest economy in the world – with one of the best business environments and all the innovation of places like Silicon Valley – investment has been flat for more than a decade. Summers’ argument, which he advocates in textbooks, essays and speeches, is that we have entered a period of permanently lower private-sector investment.
 

Developing local industries connected to the gas value chain: What can Tanzania learn from Malaysia?

Cecile Fruman's picture
Joining with our World Bank Group teams in the field in Kenya, Rwanda and Tanzania, I was pleased to recently see first-hand evidence of the strong impact that our Global Practice on Trade and Competitiveness is having on economic development throughout East Africa. Our projects are currently helping our clients improve their business environment, increase the competitiveness of firms in key sectors, and develop trade flows.

Des opportunités économiques évaluées à 6 400 milliards de dollars dans les technologies climatiques propres

Michael Ehst's picture


Renforcer la compétitivité, la résilience au changement climatique et les industries innovantes, améliorer l'accès à l'eau potable et à une énergie abordable, le tout en créant des emplois verts au niveau local… Ce n'est pas tous les jours que les pays en développement peuvent bénéficier de toutes ces retombées à partir d’un seul et même gisement d'opportunités !

Ce filon est celui des technologies climatiques propres, comme le montre un nouveau rapport élaboré par infoDev/Banque mondiale et intitulé Développer des industries vertes compétitives. Cette étude a consisté à évaluer les marchés potentiels pour 15 secteurs émergents dans le domaine des technologies propres dans les pays en développement. Globalement, les investissements dans ces secteurs devraient atteindre 6 400 milliards de dollars au cours de la prochaine décennie (2014-2023). Et, autre élément encore plus prometteur, sur cette somme globale, 1 600 milliards de dollars représentent des opportunités commerciales pour les petites et moyennes entreprises (PME), lesquelles constituent de puissants moteurs pour créer des emplois de qualité et renforcer la compétitivité dans les secteurs technologiques.
 

El clima y la tecnología limpia ofrecen oportunidades por unos US$6,4 billones

Michael Ehst's picture


Fortalecer la competitividad, la capacidad de adaptación al cambio climático y las industrias locales innovadoras. Sin mencionar, el mejoramiento del acceso al agua potable y a la energía asequible y, al mismo tiempo, la creación de empleos locales ecológicos. No todos los días estos múltiples objetivos confluyen en una oportunidad que está lista para que sea aprovechada por los países en desarrollo. 

¿Cómo se puede conseguir esto? Tal como lo destaca el nuevo informe del Banco Mundial/infoDev “Building Competitive Green Industries: The Climate and Clean Technology Opportunity in Developing Countries” (Fortalecimiento de las industrias ecológicas competitivas: La oportunidad que ofrecen el clima y la tecnología limpia en los países en desarrollo), los países que desarrollan con éxito empresas de tecnología limpia y relacionadas con el clima pueden realizar progresos significativos hacia estos diversos objetivos.

El estudio evaluó el mercado potencial de 15 sectores emergentes de tecnología limpia en el mundo en desarrollo. En conjunto, se calcula que las inversiones en estos sectores podrían alcanzar hasta US$6,4 billones durante la próxima década (2014-2023). Lo que es incluso más prometedor, US$1,6 billones de esa suma representan oportunidades de negocios para pequeñas y medianas empresas (pymes), que son importantes impulsoras de la creación de empleos de alta calidad y de la competitividad en los sectores tecnológicos.
 

Monitoring Legal Pathways to End Violence Against Women

Garam Dexter's picture

Did you know 25% of economies covered by the 2014 Women, Business and the Law pilot indicator on protecting women from violence have no laws in place on domestic violence?  The Women, Business and the Law dataset and report provide a breakdown of the legal framework affecting women’s ability to contribute to entrepreneurial and economic activity in 143 economies.  

The report, which is fully available online for download as of today, covers legal differences that affect women’s economic empowerment including areas such as personal capacity, property, and employment legislation. For the first time, the report also includes data on violence against women legislation.

It is important that men are part of the discussion about the inequalities faced by women and girls around the world. The actor Emma Watson, in her speech on behalf of the HeForShe campaign at the United Nations this week, called on men to be part of the change. But the process of change should not stop there—around the world, women need enforceable legal protection and mechanisms that guarantee their rights.   
 

The $6.4 Trillion Climate and Clean Technology Opportunity

Michael Ehst's picture
Mali. © Curt Carnemark / World Bank


Building competitiveness, resilience to climate change, and innovative local industries. Not to mention improving access to clean water and affordable energy, while creating local green jobs. It’s not every day that these multiple objectives come together in an opportunity that is ripe for the taking in developing countries. 

How can this be achieved? As the new infoDev/World Bank report Building Competitive Green Industries: The Climate and Clean Technology Opportunity in Developing Countries’ highlights, countries that successfully develop local climate and clean technology industries can achieve significant progress toward these multiple objectives.
 
The study, with technical analysis prepared by The Carbon Trust, has assessed the potential market for 15 emerging clean technology sectors in the developing world. Together, investments in these sectors are estimated to reach up to US$6.4 trillion over the coming decade (2014-2023). Even more promising, US$1.6 trillion of that sum represents business opportunities for small and medium-sized enterprises (SMEs), which are important drivers of high-quality job creation and competitiveness in technology sectors.

Structural change, from Khartoum to D.C.

Ivan Rossignol's picture
Once again, we’re approaching the Annual Meetings of the World Bank Group and the International Monetary Fund. As they do every year at this time, Africa’s Ministers of Finance and Central Bank Governors (“the Africa Caucus”) met in Khartoum on September 4, in part to preface the discussions they will have with the World Bank Group’s President.
 

No End in Sight: Why Insolvency Regimes Matter for Small Business Growth

Byoung Hwa Hwang's picture
When one hears the term “insolvency,” it is likely that images of bankrupt business shutting their doors, banks and investors fighting to recover their loans, and individuals losing their jobs come to mind.

Yet, as a new publication by the Debt Resolution and Business Exit Program at the World Bank Group points out, insolvency is not just about the liquidation of failing businesses. Rather, effective insolvency frameworks also provide an orderly legal process for the reorganization of insolvent entities.  As such, insolvency law helps save viable businesses, and allows failed businesses to “exit” the market efficiently and effectively, returning assets to productive use.

The recent World Bank Development Report 2014 notes that “bankruptcy laws […] are important to liberate productive resources from an unproductive enterprise and to ensure that creditors and potential investors in other enterprises are protected if a business fails.” Hence, effective insolvency systems bear the potential for enhancing access and availability of credit, increasing returns to creditors, preserving jobs, and fostering economic growth.  
 
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Where’s the Romance? Special Economic Zones and Cities

Austin Kilroy's picture

SEZs and cities are often wed in a marriage of convenience. SEZs have a basic need for what cities can offer: deep and specialized labor pools; specialized suppliers and business services; connectivity to national and global markets; and favorable lifestyles for potential investors. Where SEZs find themselves isolated from cities, they are often barren of firms, empty of investors, and die a lonely death. Most SEZs can’t give birth to jobs unless they are fertilized by cities.

But can SEZs and cities achieve more if they get beyond a physical relationship? What kind of problems can they solve by talking and collaborating together? Can they help achieve each other’s long-term goals?

There are surprisingly few examples of romantic partnerships. Indeed, the relationship between SEZ and city can even be adversarial. SEZs may think their beauty depends on their tax-free status, often including exemptions from municipal taxes. Once they become pregnant with firms and jobs, SEZ developers and operators are (understandably) loath to get involved with municipal projects beyond those necessary to help their tenant companies be operational.

A city meanwhile — with multiple spending obligations and often carrying the baggage of a difficult past — may see a successful SEZ as a cash cow to pay for its own projects. Yet cities tend to provide relatively few direct services to the SEZ that would justify these taxes. Trash collection, internal infrastructure maintenance, and security are usually provided by the SEZ management itself. SEZs sometimes even find themselves paying for and building the core infrastructure that they were expecting a city to provide. The marriage can turn into a nightmare, characterized by repression and abuse.



One of the few examples of an evolving relationship between an SEZ and the municipality is between the Suzhou Industrial Park (SIP) and Suzhou municipality in China. SIP initially made losses of US$90 million in 5 years, partly owing to disinterest from the city, which was more interested in the Suzhou New District on the other side of the river. Subsequently, the central government restructured the tax-sharing formula for SEZs, allowing the Suzhou municipal government to get a 10% share in all taxes collected from the zone; majority ownership was transferred from Singapore to Suzhou; and Suzhou’s vice-mayor became chief executive of the SIP. This alignment of incentives contributed to a sea-change in the relationship between the zone and the city; investments rose by more than 150 percent in a single year (2000 to 2001) and the park made its first net profit of US$3.8 million.

So, what would a marriage counselor recommend for SEZs and cities to get their relationship working really well? An enhanced and fuller relationship can help them both achieve their goals.
 

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