Does Rwanda's impressive growth tell the whole story? (Credit: CIAT, Flickr Creative Commons)
Over the last few years, a lot of optimism has been built around Rwanda being the next big thing in Africa. I guess one reason for this optimism is Rwanda’s impressive list of business friendly reforms and its equally impressive growth performance. Between 2006 and 2011, per capita income in Rwanda grew at an average rate of 5.1 percent per annum, fifth highest in Sub-Saharan Africa (SSA) region and much better than the regional average rate of 2.4 percent. Moreover, Rwanda currently ranks third in the region in the quality of the business environment as measured by the World Bank Group’s Ease of Doing Business index. So, is Rwanda really the next big thing in Africa?
New approaches to medical care can improve health outcomes (Credit: World Bank, Flickr)
In many poor countries, a large proportion of health services is provided by the private sector, including services to the poor. However, the private sector is highly fragmented and the quality of services varies widely. Private health markets consist of providers with very diverse levels of qualification, ranging from formally trained doctors with medical degrees to informal practitioners without any formal medical training. According to Jishnu Das, in rural Madhya Pradesh— one of the poorest states in India, households can access on average 7.5 private providers, 0.6 public providers and 3.04 public paramedical staff. Of those identified as doctors, 65% had no formal medical training and of every 100 visits to healthcare providers, eight were to the public sector and 70 to untrained private sector providers.
Local businesses can create jobs in Pakistan's conflict areas (Credit: Zerega, Flickr)
How can you effectively support areas shaken by years of regional instability? The Western border areas of Pakistan are one such region, where a 2009 insurgency and subsequent military operations in the Khyber Pakhtunkhwa (KP) and Federally Administered Tribal Areas (FATA) led to one of the worst crises in the country's history. More than 2 million people were forced to leave their homes and considerable damage was caused to physical and social infrastructure. The unprecedented floods of 2010 only made the situation worse.
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Thailand is a clear leader in corporate governance among Asian and emerging economies. But the recently launched 2013 Corporate Governance Report on Standards and Codes (ROSC) finds key challenges remain.
In the face of the 1997 crisis, Thailand has undertaken significant reforms that have enhanced corporate governance. Both regulators and the private sector in Thailand embraced good corporate governance, and have remained committed ever since. The World Bank also played a role - for example in helping establish the Thailand Institute of Directors in 2002 and conducting a previous Corporate Governance ROSC in 2005, which in turn was used by the Thai Securities and Exchange Commission (SEC) to support the next wave of reform. Overall, progress in the last 15 years has been impressive.
Ensuring that the world economy and its citizens have sufficient infrastructure—from transport systems to electricity grids and water pipelines—is an increasingly pressing issue. It’s also a subject matter surrounded by misconceptions. Five are worth noting:
1) Lack of investment is not always to blame.
The first is a common assumption that when infrastructure is too inadequate, congested, or old, the culprit is always a lack of investment. The truth is more complex. Globally on average, infrastructure stock --which includes transport (road, rail, ports and airports), power, water and telecommunications--accounts for about 70 percent of a country’s GDP. Brazil, whose infrastructure stock is less than 20 percent of GDP, under-spends chronically compared with its economic size and growth. It seems no coincidence that the country’s airports are 122nd out of 142 in the World Economic Forum’s rankings. Other under-investors include the United Kingdom, Canada, India, and the United States. But other countries over-invest for the size of their economies. China, Poland, Italy, South Africa, and Japan are among them. Japan’s stock of infrastructure is equivalent to nearly 180 percent of its GDP. Over the past 18 years, growth would have “justified” investment of around 3 percent of GDP, but Japan spent 5 percent.
As David Francis pointed out in a recent blog, the private sector in Latin America and the Caribbean (LAC) region showed some resilience to the heavy distortions of the recent financial crisis. Latin America’s market economy is working in a way where more productive businesses are able to survive, while less productive firms are exiting the market.
But how does this fit into the larger picture of the region’s private sector?
A partial answer to this question is that the region’s private sector is adding jobs. Especially in a period where the developed world faced severe challenges on job creation, the region succeeded in creating new jobs by almost five percent in both manufacturing and service sectors. This trend is widespread: service sector firms in all countries – as we covered in a recent note on firm performance – added jobs. And in only 5 of the region’s countries did manufacturers decrease the number of employees on their books.
As World Bank Managing Director Caroline Anstey said in her remarks at last Thursday’s event on women in the private sector, women make up nearly 50 percent of the world’s population. Despite this, they are only 40.8 percent of the formal global labor market. This gap represents a vast economic potential that could have the power to create jobs, drive economic growth and transform the global economy as we currently know it—shaky, stagnant and according to some of the data, in recession.
As a boy growing up in Africa, I always assumed that every country had its own airline. To me, a national airline was just another way a country defined itself, along with its flag, national anthem, and currency. Ghana Airways, which my family often flew (we lived in Kumasi), was a perfect example, with the red, gold and green colors of its national flag painted on every plane. They looked proud and elegant, a perfect symbol of statehood.
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Last week the World Bank launched a new approach to fostering green innovation called the Indonesia Green Innovation Pilot Program. Its aim is to learn how open innovation principles can foster the generation of market-based solutions to clean energy. A core team of designers (Catapult and Inotek) will work with rural communities, the public and private sectors to design clean energy solutions that can be adopted by the market. Keeping in line with open innovation, its first activity is to identify challenges or “problems” that will be addressed by the program through a crowdsourcing approach. So if you are in any way familiar with rural communities and energy issues in Indonesia, the program invites you to submit a challenge here until March 17.
But, if you think coming up with the kind of technology required to tackle climate change will require something akin to a Manhattan Project, rest assured, you're not alone. Googling "climate change" and "manhattan project" returns a whopping 1,540,000 results. But what does creating a "Manhattan Project" really mean? Besides uncomfortable thoughts of human-inflicted destruction, sheer scale is the first thing that comes to my mind. At its peak, during World War II, the US government employed 130,000 people in the Manhattan Project to develop the atomic bomb. The project's size together with several other features made it a classic case of what I would call "brute-force innovation": it was centrally-planned, closed, and science-driven. Even though the project included research teams across different universities, public research labs and companies across the United States, nothing was leaked in or out and each team had a very specific assigned task and plan. Through the Manhattan Project the government spearheaded the research, developed, testing and deployment of a revolutionary technology from start to finish over a span of four years. And there were no startups, spin-offs, royalty incentives, public-private-partnerships, venture capitalists, crowdsourcing, first-mover advantage, standard-setting or IPOs. Basically none of the buzzwords we associate with disruptive innovation in the 21st Century.