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.
Private Sector Development
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
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.
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.
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 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.
Over the last two decades the number of investment promotion agencies (IPAs) has mushroomed from only a few dozen in the early 1980s to roughly 250 agencies worldwide today. Despite this growth, relatively little attention has been paid towards whether or not investment promotion agencies actually have an impact on the growth in FDI to a location.
Figure 1: Bogota, Colombia # of inbound FDI projects (by quarter) between 2003-2011
Source: fDi Markets Database, Authors Calculations
How we took this approach to popularize SEZs in Bangladesh, against a backdrop of regional resistance
Imagine that you are starting an economic zones development program in a region while next door, riots are already flaring over a proposed Special Economic Zone (SEZ). Imagine that news of the protests is already all over the media in the country you are operating in and your clients and other stakeholders are bound to take note. How do you assuage their concerns and move ahead with the design of your economic zones program?
As I flip through TV channels and newspapers, all I see are massive advertisement campaigns of malls, stores and websites opening at midnight of the beloved American shopping tradition of "Black Friday" While many could see this as the sporting event of the year for the shopaholic greed machine--others are asking questions on how far commercialism in the United States is driving change in the way companies are setting precedents for business practices.
When most people think of tourism, they think about a vacation to a new destination, an island retreat, a beautiful vineyard, or a hike in the mountains. They rarely think of tourism as a source of inclusive poverty reduction in the developing world.
Nkwichi Lodge in Mozambique is a good example. Investments to the projects created 75 jobs for locals supporting over 1,000 community members. It also established a community trust that built five local schools, a maternity clinic and a maize mill that provided nutrition and education to more than 350 farmers and their families. This is having a transformative impact on poverty reduction and improvements in the quality of life of some of the worlds poorest.
I pay through the nose for health insurance for my family, and I’m not happy about it. As a U.S. citizen, I don’t have the luxury of government-backed healthcare. Since I’m technically self-employed, I have to pay the full premium myself. Want some figures? It costs me $830 a month for a family of four, with a high deductible. Besides being expensive, it takes a huge effort to deal with insurance issues, and I find that my provider is expert at finding reasons not to reimburse me for medical expenses. This is chewing a gaping hole in my budget. The only way I’ll ever get value for my money is if I’m hit by a bus.