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New Voices in Investment: How Emerging Market Multinationals Decide Where, Why, and Why Not to Invest

Gonzalo Varela's picture

Emerging market multinationals (EMMs) have become increasingly salient players in global markets. In 2013, one out of every three dollars invested abroad originated from multinationals in emerging economies.

Up until now, we have had a limited understanding of the characteristics, motivations, and strategies of these firms. Why do EMMs decide to invest abroad? In which markets do they concentrate their investments and why? And how do their strategies and needs compare to those of traditional multinationals from developed countries?

In a book we will launch tomorrow at the World Bank, “New Voices in Investment,” we address these questions using a World Bank and UNIDO-funded survey of 713 firms from four emerging economies: Brazil, India, Korea, and South Africa.

How to De-Enclave the African Resource Sector for More Inclusive Growth and Development

Ken Opalo's picture
Oil drums in Ethiopia. Source - 10b travelling

The recent acceleration in growth rates across much of sub-Saharan Africa may not be purely commodity-driven, but for many of the region’s economies macro-economic stability is still dependent on prudent management of natural resources. For this reason, a strategic shift is required to shield African economies from commodity boom-burst cycles.
 
For much of the last half century, the dominant political economy model of natural resource management in Africa was this: states received royalties from mostly private mining companies and then were supposed to invest in public goods such as roads, hospitals, and schools. Private mining companies, for their part, would pick up the slack whenever states failed. Most of the time this happened through corporate social responsibility (CSR) initiatives, as a way of buying the social license needed to operate in specific communities.
 
This model has proven to be a complete failure in nearly all resource-rich African states, for a number of reasons.
 

The WTO Environmental Goods Agreement: Why Even A Small Step Forward Is a Good Step

Miles McKenna's picture

Will the WTO be the first global organization to take action on climate change? Source - VerticalarrayInternational trade has a critical role to play in environmental protection and the effort to mitigate climate change. While it certainly isn’t always framed this way, it is important to realize that increased trade and economic growth are not necessarily incompatible with a cleaner environment and a healthier climate.

If we are going to move away from dirty fossil fuels and inefficient energy processes at a rate necessary to limit the likely devastating results of a warmer planet, then we need enabling policies in place—especially when it comes to trade policy.

That’s why, this week, a group of 14 World Trade Organization (WTO) Members are meeting to begin the second round of negotiations on the Environmental Goods Agreement (EGA)—an effort aimed at liberalizing trade in products that help make our world cleaner and greener.
 

Notes From the Field: Customs Reform in Russia, a Sophisticated Client with a Long Border

Miles McKenna's picture

Editor's Note: "Notes From the Field" is an occasional feature where we let World Bank Group professionals conducting interesting trade-related projects around the globe explain some of the challenges and triumphs of their day-to-day work. The views expressed here are personal and should not be attributed to the World Bank Group. All interviews have been edited for clarity.

The interview below was conducted with Amit Mukherjee, a Lead Public Sector Specialist with the World Bank Group. Amit works in the WBG’s new Governance Global Practice, where much of his work centers on the Russian Federation. Amit was the project team leader for the recent Russian Federation Customs Development Project (CDP), which helped to reform and modernize the country's Federal Customs Service. Approved in 2003, the CDP wrapped up last year—with some impressive results. The Trade Post spoke with Amit about his experience in Russia, what makes reform in the country challenging, and where the two parties’ relationship can bring about positive outcomes in the future.

Eliminating Customs of Corruption: New Approaches in Cameroon & Afghanistan

Gerard McLinden's picture

Corruption continues to plague customs administrations around the world regardless of their level of development and despite intense public attention.

Recent high profile cases in many first world countries reinforce what we always knew—that no country is immune, and that there are no quick fix solutions available. The very nature of customs work makes it vulnerable to many forms of corruption, from the payment of informal facilitation fees to large scale fraud and other serious criminal activities.

But this blanket generalization belies some genuine progress in countries where reforms are making a measurable impact on operational effectiveness and integrity. 
 

EU-Turkey Customs Union: Unique, Pioneering, and Still Beneficial

Ian Gillson's picture

Source - World BankThe EU-Turkey customs union (CU) has been a key catalyst in the economic transformation of Turkey over the past two decades and an effective mechanism for deeper integration between the two parties, according to a new World Bank evaluation of the CU.

While its supporters and critics may continue to debate in the political arena, this much is now clear: the CU has brought enormous benefits to Turkey and has done more to facilitate trade than a free trade agreement (FTA) would have. But more can still be done to both modernize the agreement and deepen trade integration between the parties.

Assessing Services Policies in Developing Countries

Sebastián Sáez's picture

Empirical literature confirms the significant contribution that services trade can play in developing economies. High-quality and low-cost services can enhance competitiveness, connect countries to the global economy, and help diversify their exports.

The question is how to foster the development of the services trade in these countries. Research shows that the liberalization of services barriers can increase the performance of manufacturing and agricultural exports, for example, and help boost quality and cut costs, as well as increase service exports.

But liberalization alone is insufficient for successful reform. Services liberalization requires that a country design a careful liberalization process that takes into account its specific conditions. Many countries which have acceded to the WTO and have adopted significant liberalization commitments have not fully reaped the benefits of those reforms. One of the explanations is probably that their process was incomplete. In general, liberalization needs to be complemented by strong and solid regulatory frameworks. Without these conditions in place--- contestable markets, strong regulatory governance, and enforcement capacity--- liberalization will not provide the expected benefits.

Why is it so difficult to create the necessary conditions for successful services trade reforms?

Growth in Greece? A Logistical Possibility

Daria Taglioni's picture

The Partnenon in Athesn, Greece. Source -  Nicholas Doumani.More than 95 percent of goods traded between Europe and Asia are transported via deep sea. All of this happens through two primary routes-- some serious traffic. But it's far from stop-and-go. In fact, most doesn’t stop at all.

Large container ships leave ports in Asia and proceed directly to Rotterdam, the Netherlands. Many choose to get there by passing through the Suez Canal, entering the Mediterranean, and bypassing its bygone empires.

One of these ancient powers, Greece, now finds itself in a marginal position on the logistical map of Europe. Despite being geographically and economically well located, it’s far from being the hub it once was. The World Bank’s International Trade Unit and the Transport Unit of the World Bank’s Vice Presidency for the Europe and Central Asia Region recently teamed up with the government of Greece to find out how the country can capture a share of the world’s growing East-West trade and kick-start an economy that has been struggling to maintain GDP growth after the global economic crisis.
 

Notes From the Field: World Bank Projects Undeterred by Trade Developments in Armenia

Miles McKenna's picture

About "Notes From the Field": With this occasional feature, we let World Bank professionals who are conducting interesting trade-related projects around the globe explain some of the challenges and triumphs of their day-to-day work. The views expressed here are personal and should not be attributed to the World Bank. All interviews have been edited for clarity.
Gohar Gyulumyan. Source - World Bank.

The interview below was conducted with Gohar Gyulumyan, a Senior Economist in the World Bank’s Europe and Central Asia regional division of the Poverty Reduction and Economic Management (PREM) network. Her work has been strongly centered on economic development in Armenia, where she is now based in the country office. She spoke with us about her most recent work on trade facilitation and the removal of trade barriers, including what the recent government announcement to join the Eurasian Customs Union may mean for the Bank's work in the country in the future.

Why Does Cargo Sit So Long In African Ports? Not Just Poor Infrastructure… Poor Incentives

Gael Raballand's picture

Container ship in Durban. Source - flickr.com/photos/royluck/A major factor holding back African development is the time it takes to transport goods within the continent. Though road conditions are poor in much of Sub-Saharan Africa, research has shown that ports are major contributors to transport delays: Cargo traveling from a port to a city in a landlocked Sub-Saharan African country generally spends more of its time (75 percent) at the port than on the road. Cargo spends nearly three weeks on average in Sub-Saharan African ports, compared to under a week in large ports in Asia, Europe and Latin America. This has hurt the region’s economies and deterred the development of value-added industries that rely on time-sensitive supply chains.

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