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The World Region

How Technology Centers can help clients meet the challenges of Industry 4.0

Justin Hill's picture

The Picard leather goods factory in Dhaka, Bangladesh produces bags, purses and wallets that are sold in upmarket stores throughout the developed world under various well-known brand names, and in their own chain of stores in Germany.  The factory is clean, efficient and goods are produced under all the relevant international standards.  

Picard leather factory
But Picard are a rarity, and most Bangladeshi manufacturing looks just like it did 50 years ago.  They produce cheap goods for the local market, but are a huge distance from producing at global standards.  Unfortunately, this is also the case with most manufacturers in emerging economies. And all manufacturing is being changed by a range of new technologies known as Industry 4.0, with manufacturing becoming more global, more automated, more highly skilled, more infused with technology and more integrated with services. Whole manufacturing sectors, but in particular Small and Medium Enterprises (SMEs) face real challenges if they are to adapt rather than be left behind. 

From spreadsheets to suptech for financial sector market conduct supervision

Douglas Randall's picture

From Spreadsheets to Suptech for Financial Sector Market Conduct Supervision

Market conduct supervisors in the financial sector have a tough job. And it’s getting tougher.  

Their core work involves collecting data from disparate sources and undertaking complex analyses to identify and assess risks. They must also determine compliance with rules that are often principles-based. For example, what do complaints data, consumer agreements and marketing materials indicate about whether a financial service provider is treating its customers fairly?

De-risking and remittances: the myth of the “underlying transaction” debunked

Marco Nicoli's picture
Also available in: Español | Français
Societé Genérale Mauritanie bank branch in Nouakchott, Mauritania.
Societé Genérale Mauritanie bank branch in Nouakchott, Mauritania. ©️ Arne Hoel

This Saturday, June 16, we celebrate International Day of Family Remittances to recognize “the significant financial contribution migrant workers make to the wellbeing of their families back home and to the sustainable development of their countries of origin.”

Which is why it is the perfect time to talk about a trend facing remittance service providers who migrants rely on to transfer their money across borders and back home.
In recent years, the international remittance services industry has been subject to the so-called “de-risking” phenomenon. Banks believe that anti-money laundering and counter financing of terrorism (AML/CFT) regulations and enforcement practices have made serving money transfer operators (MTOs) too risky from a legal and reputational perspective. For banks, the profit of serving MTOs is not considered sufficient to justify the level of effort required to manage these increased risks.
 

Data on firms by firms: how companies like Gap could remove investment barriers

Andreja Marusic's picture
To invest or not to invest? When determining whether to enter a new market, businesses must fully understand the potential risks and opportunities. To do so, they need access to information on relevant market players, such as potential suppliers, customers or competitors. While governments require businesses to supply data when registering as well as throughout their operation, these repositories of data held by business registries, tax authorities, statistical offices and other registries are often not updated properly nor are they made available to the general public in a comprehensive way.

Global Investment Competitiveness: New Insights on FDI

Anabel Gonzalez's picture

It is easy enough to find data on flows of foreign direct investment (FDI). There are also plenty of anecdotes out there that purportedly encapsulate what businesses worldwide are thinking. It is far more difficult, however, to establish rigorous connections between global investment trends and individual investment decisions by international companies. In the World Bank Group’s newly published Global Investment Competitiveness Report 2017–2018, our team does just this, combining new survey data, rigorous econometric analysis, and extensive literature reviews to reveal what is going on behind the headline numbers.



Here are some of the key takeaways:
 

Why does efficiency-seeking FDI matter?

Cecile Fruman's picture
Today we face an interesting paradox. The number of people in the world living in extreme poverty has decreased dramatically in the past three decades. In 1981 half of the population in the developing world lived in extreme poverty. By 2010, despite a 60 percent increase in the developing world’s population, that figure dropped to 21 percent.

While extreme poverty has diminished, however, the gap between the richest and poorest countries has increased dramatically. In 1776, when Adam Smith wrote The Wealth of Nations, the richest country in the world was approximately four times wealthier than the poorest. Today, the world’s richest country is more than 400 times richer than the poorest.

What separates them?

One answer is knowledge, diversification and the composition of exports, all areas in which foreign direct investment (FDI) has an important role to play. 

FDI matters, but not all FDI is created equal
 
While FDI is important for economic growth, not all FDI is the same. One way to differentiate is by an investor’s motivations using a framework established by British economist John Dunning:
  • Natural resource-seeking investment: Motivated by investor interest in accessing and exploiting natural resources.
  • Market-seeking investment: Motivated by investor interest in serving domestic or regional markets.
  • Strategic asset-seeking investment: Motivated by investor interest in acquiring strategic assets (brands, human capital, distribution networks, etc.) that will enable a firm to compete in a given market. Takes place through mergers and acquisitions.
  • Efficiency-seeking investment: FDI that comes into a country seeking to benefit from factors that enable it to compete in international markets.

This last category – efficiency-seeking FDI – is particularly important for countries looking to integrate into the global economy and move up the value chain.
 

Foreign direct investment and development: Insights from literature and ideas for research

Christine Qiang's picture
 The Leeds Library by Flickr user Michael D Beckwith


For many decades, academia and policy making has debated about the role of Foreign Direct Investment (FDI) in development. Such question has been very difficult to elucidate, not only because the discussion has being colored by many ideological dogmas, but also because the very fundamental characteristics of cross border investment have evolved over time. Indeed, over the last five decades, the paradigm of FDI has changed significantly. Traditionally FDI has been visualized as a flow of capital, flowing from “North” to “South” by big multinational enterprises (MNEs) from industrial countries investing in developing countries, traditionally aiming to exploit natural resources in the latter or to substitute trade as a means to serve domestic consumption markets. Such paradigm has changed significantly.
 
Today, FDI is not only about capital, but also --and more important-- about technology and know-how, it no longer flows from “North” to “South”, but also from  “South” to “South” and from “South” to “North”. Further, FDI is no longer a substitute of trade, but quite the opposite. Today FDI has become part of the process of international production, by which investors locate in one country to produce a good or a service that is part of a broader global value chain (GVC). Investors then, have become traders and vice-versa. Moreover, FDI is now not only carried out by only big MNEs, but also from relatively smaller firms from developing countries that are investing in countries beyond their home countries. Last but not least, cross-border investment is no longer only about portfolio investment and FDI. International patterns of production are leading to new forms of cross-border investment, in which foreign investors share their intangible assets such as know-how or brands in conjunction with local capital or tangible assets of domestic investors. This is the case of non-equity modes of investment (NEMs) –such as franchises, outsourcing, management contracts, contract farming or manufacturing.

Should governments support the development of agricultural insurance markets?

Daniel Clarke's picture



How governments can ensure that low-income farmers are financially protected against natural disasters, such as droughts, was at the heart of a panel discussion at the “Global Index Insurance Conference,” which concluded earlier this week in Paris.
 

Fostering Private Sector Development in Fragile States: A Piece of Cake?

Steve Utterwulghe's picture
Private sector development (PSD) plays a crucial role in post-conflict economic development and poverty alleviation. Fragile states, however, face major challenges, such as difficult access to finance, power and markets; poor infrastructure; high levels of corruption; and a lack of transparency in the regulatory environment. 

The private sector has demonstrated its resilience in the face of conflict and fragility, operating at the informal level and delivering services that are traditionally the mandate of public institutions. However, in post-conflict situations, PSD can have predatory aspects, thriving on the institutional and regulatory vacuum that prevails. The private sector will need to create 90 percent of jobs worldwide to meet the international community’s antipoverty goals, so pro-poor and pro-growth strategies need to focus on strengthening the positive aspects of PSD, even while tackling its negative aspects.

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