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Private Sector Development

The Private Sector, Learning, and the Poor

David Lawrence's picture

When the words “private sector” and “education” come together, they conjure up the widening chasm between the rich and poor: elite education in private schools. An article in The New York Times, for example, describes a growing education gap as contributing to a “kind of cultural divide” in the United States. A smart kid growing up without access to good education, the argument goes, will be limited for life, regardless of how bright or motivated he or she is.

More, Better Jobs

Nigel Twose's picture

Like every other development institution, The World Bank Group's International Finance Corporation (IFC) is deeply concerned with how to create more and better jobs. There’s no question that jobs are the key issue in any discussion about ending poverty.  The 60,000 poor people who participated in Deepa Narayan's Voices of the Poor study 13 years ago were right—jobs are the surest way out of poverty for people across the world.

Today, IFC publishes a report on the findings of a study about how jobs are created by the private sector.  Given the private sector provides 90 per cent of jobs, the estimated 600 million that   need to be created by 2020 will inevitably have to come from the private sector.

Unlocking the Potential of the Private Health Sector

The poor cannot afford to pay money for health care so they use mainly free government-run health services. Isn't that what you were always told? So if donors want to help the poor they should give their money to governments that provide such services for the poor. I am sure you have read that in many books and articles.

Wait, let’s run that scene once more in real time. What actually happens out there in the real world? Often the government clinics described above have difficulty hiring staff, especially in poor rural areas. The majority of young health workers prefer to live in urban areas where they feel safer and can bring up their children with good schools, near family and friends. Long wait times and lack of medicines at government-run health facilities make the private health sector more attractive to consumers.

“Empowering women is smart economics”

Zia Morales's picture

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.

Can industries take flight in conflict situations?

Can industrial interventions in conflict areas, such as the West Bank,  improve prospects for future generations? (Credit: delayedgratification, Flickr Creative Commons)The World Bank is actively expanding its portfolio in the world’s most troubled conflict zones. This invites the question: What can the Bank accomplish in countries riven by conflict? I would flip this question around and ask: What steps are needed by the country to rebuild itself?

Whenever I have asked in-country practitioners (whether Bank staff or local NGOs or journalists) what the country really needs, the answer I have heard most often has been: “Jobs.” Get them good jobs, higher incomes, and break the vicious trap of poverty and violence, is the common refrain.

Some lessons from privatizing national airlines

David Lawrence's picture

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.Does privatization help keep airlines in the sky? (Credit: Matt Hintsa)

FDI in Ireland: A Reason for Optimism?

John Anderson's picture

On a recent trip to Ireland, stories about the impact of the continuing economic crisis were abundant. Newspapers ran stories about the substantial loss of wealth and purchasing power, such as the increase in 'negative equity' as the value of homes owned by the middle class fell significantly below their mortgages. Cab drivers explained how jobs had been shed throughout the economy, and bemoaned the resulting rise in the number of drivers and increased competition for fares. The reality of the recession and fiscal collapse following the banking crisis of late 2008 was clear.

However, anecdotal evidence about a different aspect of Irish finance – foreign direct investment – suggested a more positive story. I walked through one neighborhood in Dublin that houses the European headquarters of Google, Facebook, and LinkedIn. The latter two were established after the onset of the economic crisis, and Google is in the process of expanding its presence in Dublin. Lawyers at large corporate law firms were excited to discuss FDI, citing it as a key driver of Ireland’s future growth. One firm even maintains a FDI index that highlights large inflows and the positive perception of Ireland as a destination for US investment.

Might FDI in Ireland be the best indicator to consider the strength of the economic fundamentals that enable long-term growth? Ireland has historically benefitted from large inflows of FDI relative to its size. And despite the recent economic crisis, these inflows have largely continued.

Over the past 10 years, inflows of FDI into Ireland tend to be substantially higher as a percentage of GDP than inflows into other OECD economies (see Figure 1). In 2009 and 2010, the two years immediately following the banking collapse, Ireland attracted three to four times more FDI proportionately than other OECD economies. These inflows were not just large in relative terms – they were equivalent to 11.7% of GDP in 2009 and 12.9% in 2010. The negative inflows in 2005 and 2008 do indicate that more money was disinvested out of Ireland than newly invested in the economy those years. However, such outflows are mostly loans or dividend payments from foreign-owned firms in Ireland to their affiliates abroad, at least some of which were likely caused by a 2004 change in the US tax rate on foreign profits.

Figure 1: Net inflows of FDI as percentage of GDP, Ireland vs OECD
 
Source: UNCTAD and author’s calculations

Somali Remittance Freeze: What Can Be Done About It?

The remittance freeze is impacting Somali families that rely on relatives in America (photo credit: Trocaire, Flickr)Minneapolis has the largest Somali population in the US. Sending remittances to Somalia was put at risk late December when the Sunrise Community Bank in Minneapolis announced that it was going to close the accounts of all Somali remittance companies on December 30th 2011.To our knowledge, the Sunrise Community Bank was the last bank that was serving Somali remittance companies in Minneapolis. Closure of accounts meant no operation for remittance companies. This in turn meant no money for remittance-dependent Somalis, who had no other options since remittance service providers such as Western Union and MoneyGram didn’t operate in Somalia. Aid groups lobbied to challenge the closure, and their petition reached all the way up to President Obama.

Rising to the Reform Challenge: Doing Business in Indonesia

Katerina Leris's picture

Read this post in Bahasa.

Ambitious and fast rising—these words aptly describe modern Indonesia. Amidst a global economic slowdown, Indonesia was the third fastest growing economy among the G-20 for 2009 and it continues to post strong economic growth, at a projected rate of 6.4% for 2012. Improving economic competitiveness by creating a more salutary business climate is one of Indonesia’s national priorities for 2010 to 2014.Like other cities in Indonesia, Banda Aceh has made strides in many areas measured.

Indonesia is walking the talk. Doing Business in Indonesia 2012 launched January 31 in Jakarta, finds  that all 14 cities previously measured in Doing Business in Indonesia 2010 have improved business registration processes over the last two years, while 10 out of 14 cities expedited the approval of construction permits. During his keynote address on the launching of the report, the Minister of State Ministry for Administrative Reforms talked about the cities moving from 'comfort zone' to 'competitive zone'.

The Rich Role of Mobile Phones in Financial Inclusion

Ignacio Mas's picture

The mobile phone has become a useful tool in tackling the  financial access deficit in many countries. M-PESA in Kenya has shown that adoption curves typical of new information-based technologies (radio,TV, mobiles, internet) can be applied to  financial services. Yet M-PESA-like mobile payment schemes have only scratched the surface of what is possible. The typical mobile money user still uses it only a couple of times a month.

In a recent paper, Colin Mayer of the Saïd Business School at the University of Oxford and I argue that the real power of mobile will come when it is seen not only as a mechanism for reducing access costs but also for building new types of banking experiences. Indeed, the agenda needs to shift from access to use.

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