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Global Economy

Unlocking Competitiveness: Why Invest in Rural Vietnam?

Christine Qiang's picture
For investors seeking opportunities in Vietnam, the rural province of Dong Thap may not be the first location that comes to mind. Located in the southwest corner of Vietnam, Dong Thap is remote – the nearest airport is a three-hour drive. Road infrastructure is relatively poor, and until recently was complicated by deficient bridges over the Mekong River. It was also known for delayed customs processes that could disrupt supply chains.
 

Why Do Foreign Investors’ Attitudes toward Women Matter?

Heba Shams's picture
Gender equality is one of the sustainable development goals (SDGs) that calls for ensuring women’s full participation in political, economic and public life as a target. Gender inequality is still a key development issue. The World Economic Forum’s Gender Gap Report 2017 found a gender gap of 42% when it came to labor force participation and earned income. Unrealized Potential, a May 2018 publication of the World Bank Group, puts a staggering figure to the cost of this inequality in earnings - $160.2 trillion globally, or $23,620 per capita.
Kuralay Aitzhanova, Dispatcher Manager at the Energy Transmission Control Center of KEGOK. Kazakhstan. Photo: Shynar Jetpissova / World Bank

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.
 

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:
 

The Future of Jobs and the Fourth Industrial Revolution: Business as Usual for Unusual Business

Jieun Choi's picture
The global economy is on the precipice of a Fourth Industrial Revolution – defined by evolving technological trends that have the potential to fundamentally change life for millions of people around the world. Increasingly, technology is connecting the digital world with the physical one, resulting in new innovations such as artificial intelligence and self-driving cars.
 

The future of business matchmaking

Aman Baboolal's picture

How a new green business facility in South Africa is connecting local companies to the global green economy

Traditional trade mission functions are becoming obsolete. Over hors d'oeuvres, business cards are exchanged, elevator pitches are delivered but, in most cases, entrepreneurs leave with empty promises to stay in touch and no useful contacts. This may sound a little cynical but the reality is that in an age of business models “ripe for disruption,” the ways to create viable business partnerships across borders have not changed for decades.
 

Helsinki in the winter? It’s for a good cause

Toni Kristian Eliasz's picture
Last month, we returned to Slush, a global start-up conference in Finland. During a dinner discussion, a colleague from Boston Consulting Group mentioned that only a few years ago a C-level executive would have been considered an oddball among the mostly young start-up entrepreneurs. But today, one would need to justify why top management is not paying attention. The conference even chartered a plane full of Silicon Valley investors to join 17,000 other participants in gloomy Helsinki.

'Making the case for trade': Winning voters’ trust by strengthening social safety nets

Christopher Colford's picture

Policy persuasion is most effective when it draws on the evidence base of all the social-science disciplines. Every strand of the social sciences – not just the mathematical precision of economics, but also the nuanced interpretations of history and the subtle trajectories of sociology – has a great deal to contribute as policymakers balance competing priorities.

That multidisciplinary approach – emphasized in such recent works as The History Manifesto, in which Harvard and Brown University historians call for policymakers’ greater reliance on the combined reasoning of all the social sciences – was thoroughly borne out in the recent Development Economics Series lecture by economist David Autor of MIT (who is a scholar at the National Bureau of Economic Research). Presenting a research paper on trade policy, and underscoring the importance of public opinion in shaping policymakers’ approach to it, Autor’s presentation used the logic of political science to highlight the electoral mood swings that help shape countries’ position on international trade.

Using the perspectives of political science – in the paper, “Importing Political Polarization? The Electoral Consequences of Rising Trade Exposure” (co-authored with colleagues from the University of Zurich; the University of California, San Diego; and Lund University) – was a valuable way to help remind Autor's economics-focused World Bank Group audience that policymaking does not occur in an academic vacuum. Even though the Bank’s economics-heavy analyses may try to distill policy options into quantifiable formulae, the policymakers whom the Bank advises get their political mandate from their countries’ volatile voters – who do not always follow homo economicus’ coldly rational approach to decision-making.

Amid the topsy-turvy 2016 electoral cycle in many countries – in which voters’ fears about job losses due to international trade have been inflamed amid an upsurge of populism and protectionism – you don’t have to be a public-opinion pollster to affirm Autor's assertion in his analysis of recent U.S. voting patterns: “We detect an ideological realignment that is centered in trade-exposed local labor markets and that commences prior to the divisive 2016 U.S. presidential election. Exploiting the exogenous component of rising trade with China and classifying legislator ideologies by their congressional voting record, we find strong evidence that congressional districts exposed to larger increases in import competition disproportionately removed moderate representatives from office in the 2000s.”

Translation: If you’re a pro-trade lawmaker in a district that has a high degree of imports from overseas, in a region that has endured what Autor calls “economic scarring,” then you’re likely to pay a heavy price at the ballot box – and, if you’re defeated, your successor just might be a strident protectionist. The Autor analysis shrewdly underscores the adjective “political” in the anodyne textbook phrase, “political economy.”

Vigorous ideas for ‘Powering Up Growth’ through energetic policy reforms

Christopher Colford's picture
In an era of chronically slow economic growth, what steps can policymakers take to help jump-start productivity, spur employment and build long-term wealth? Recognizing that the private sector must create about 90 percent of the economy’s future jobs, which policy reforms can most effectively encourage private-sector investment?

Questions like those – focusing on the private sector as the principal driver of growth, with deft public policy as an indispensable catalyst – inspired a dialogue among some of the developing world’s most experienced policymakers at a major forum, “Powering Up Growth: Ideas for Beating the Slowdown,” during the recent Spring Meetings of the World Bank Group and the International Monetary Fund. All four government Ministers on the panel – from both commodity-exporting and  -importing countries – voiced a sense of urgency, describing their efforts to attract private investment to spur job creation, amid a global economy that seems destined for prolonged weakness.

Before the policymakers ascended the Preston Auditorium stage, sobering updates had arrived from the Bank and the Fund: The Bank’s latest forecast for global growth has been lowered from 2.9 percent to 2.5 percent – with the caveat that this latest forecast is subject to further downside risks. That downward revision is in parallel with the Fund’s similar projection, which sees global growth this year in the neighborhood of just 3 percent.

Policymakers worldwide are eager to explore any option to try to lay the foundation for an eventual return to a long-term economic expansion. It was clear that the panelists in the “Powering Up Growth” event – which was convened by Jan Walliser, the Vice President for the Bank Group’s practice group on Equitable Growth, Finance and Institutions (EFI) and organized by the Global Practice for Macroeconomics and Fiscal Management (MFM) – were focused on long-term structural changes that can energize the private sector’s ability to drive growth.
 
Powering Up Growth: Ideas for Beating the Slowdown


The panelists – from Bolivia, Pakistan, Angola and Ukraine – represented countries from different regions and at various levels of economic development, but they shared a determination to jump-start growth through reforms that will strengthen the private sector’s long-term confidence. The Ministers, at times, seemed to envision opportunities, not just for short-term structural adjustment of their priorities or medium-term structural reform of their policy farmeworks, but for far-reaching structural transformation of their economies and societies.

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