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Time for South Asia to deal with fiscal weaknesses

Annette Dixon's picture
South Asia Economic Focus Spring 2016 Fading Tailwinds cover


There’s a lot of good news in the World Bank’s latest economic report on South Asia: the region is the fastest growing in the world and its limited exposure to global economic turbulence means that its near-term prospects look good. 

5 lessons learned to take action for peaceful and inclusive societies

Rediet Yibekal Wegayehu's picture
Syrian refugees, Ali and his daughter, Cham are waiting to see a nurse at
the Howard Karagheusian primary health care center, in Beirut, Lebanon.

This year’s Fragility Forum themed Take Action for Peaceful and Inclusive Societies was held at a time when the plight of millions of forcibly displaced people and growing violent extremism shows real urgency. The 70 plus sessions touched on so many intersections of development, peacebuilding and governance and recurring themes from how to strengthen the global response to forced displacement; to exploring next generation technology; to ending poverty in fragile settings. The following are my key takeaways.

1. Partnerships are the cornerstone of greater success.
The panelists emphasized strongly the idea of partnerships to tackle fragility, conflict and violence. Particularly, the development community and humanitarian groups have long worked separately but with the growing development challenge of the Syrian refugee crisis, a new approach is required. President Kim stressed that “it’s time to work together”. Better cooperation also requires avoiding overlapping goals as Ali Sindi, Minister of Planning, Kurdistan Regional Government, Iraq noted during the first plenary.

Macro hype, micro hope: Optimists champion ‘Community-Led Development’

Christopher Colford's picture

Now there’s a guy who really puts the full-scale dismal into “the dismal science” of economics – spurring optimists to quickly seek out more hopeful visions of the future.

Those seeking a glimmer of hope about the economic future were well-advised to keep their expectations low as they awaited the gloomy analysis by Prof. Robert J. Gordon, the esteemed economic historian from Northwestern University, who spoke at the World Bank Group’s Macrofiscal Seminar Series on March 31. As anticipated, Gordon’s expertly documented but relentlessly downbeat scenario, based on his latest book, “The Rise and Fall of American Growth,” persuasively made the case for a future of chronically sluggish growth in the world’s advanced economies.

Gordon’s chilling projections combine some of the darkest aspects of Lawrence Summers’ worries about “secular stagnation,” Christine Lagarde’s lamentations of a “New Mediocre” and private-sector leaders’ struggle to strategize for the “New Normal.” Gordon’s bleak thesis foresees “little growth” – although, significantly, not zero growth – as the developed world’s weary economies endure perhaps decades of drift.

Policymakers in the world’s largest economies are surely exasperated by the painstaking crawl out of the global financial crisis – yet they don’t have much positive news to look forward to, asserts Gordon. With “declining potential productivity growth” compounding the impact of declining population growth and a declining labor-force participation rate, there’s probably no technological deus ex machina that can soon propel the world’s advanced economies toward restored prosperity.

That viewpoint defies the techno-utopian visions that have been so eagerly peddled to anxious Western voters, who can only dream of a return to brisk late-1990s-style growth. Quipped the Macrofiscal seminar’s discussant, Deepak Mishra: Gordon “has made a career of busting the technology hype.”

Yet Gordon’s logic need not trigger total despair among the Bank’s poverty-fighting professionals and their counterparts at other development institutions. Gordon emphasized that his analysis is about the American economy, and, to some extent, about the mature economies of Western Europe. His book’s foreboding predictions, he said, do not extend to developing economies, which enjoy “great potential for growth.”

For can-do pragmatists who strive for stronger growth and sustained progress in developing economies, there’s a ready antidote to Gordon-style macroeconomic gloom. By happenstance, immediately after Gordon delivered his grim analysis in the Bank’s J Building auditorium, optimists seeking inspiration needed only to cross the street to the Bank’s Main Complex to hear an energetic appeal for greater hands-on activism.

With an update on the movement for Community-Led Development (CLD), a seminar sponsored by the Bank’s Community-Driven Development Global Solutions Group learned of the promise that CLD offers for inspiring inclusive, sustainable solutions that enlist citizens’ engagement and build community-level confidence in strong governance standards.

Moving from macro to micro – dispelling the dread of inexorable global forces and embracing positive citizen-centric action – the CLD leaders leapfrogged Gordon’s macro-level angst to highlight micro-level opportunity.


Does transparency hobble effective governance?

Sina Odugbemi's picture

A remarkable debate on transparency and open government took place on March 15, 2016 at the Reynolds Journalism Institute and the Truman School of Public Affairs at the University of Missouri, Missouri, USA.  The issue was: Is American Government too open? Professor Bruce E. Cain of Stanford University argued that “Yes, American Government Is Too Open”, and Professor Charles Lewis of American University, Washington DC, argued that “No, American Government is Not Too Open”. You can watch the debate here.

It is a rich and illuminating exchange, and one that the two professors somehow manage to keep civil. I watched the debate online but in what follows I draw from the written commentary submitted by both professors, and I try to focus on the universally applicable points that each one made.

2008: Defining common goals through deliberation

Erdene-Ochir Badarch's picture

Continuing with our series looking at the 25 year partnership between Mongolia and the World Bank, today we look at 2008, a year that will be remembered by many Mongolians for events both high and low. The low point was the riot that followed parliamentary elections on 1st July, 2008. Five innocent lives were lost and Ulaanbaatar city was under a state emergency for two days and three nights. While Mongolia is rightfully praised for its peaceful transition from one regime to another in 1990, this incident of 2008 will be remembered as the darkest time in the 25 years of democracy.

The high of 2008 occurred after this riot when Mr. Tuvshinbayr Naidan brought home Mongolia’s 1st ever gold medal from the Beijing summer Olympics. I will never forget the sight of people waving our national flag, gathering in the Central Square and cheering with exhilaration.   The World Bank’s Country Director, David Dollar, also celebrated this historic occasion, noting that “The event was important enough to get rival political parties to shake hands and share the pride.”

Make in India: Which exports can drive the next wave of growth?

Saurabh Mishra's picture
Structural transformation depends not only on how much countries export but also on what they export and with whom they trade. In my new IMF working paper with Rahul Anand and Kalpana Kochhar, we break new grounds in analyzing India’s exports by the technological content, quality, sophistication, and complexity of India’s export basket. The paper can be found here. Here are few key pieces of evidence from our paper:
 
Technological content of India’s exports   

The evolution of Indian exports has not followed a “textbook” pattern. The pattern of evolution points to a dichotomy in the Indian economy – a well integrated, technologically advanced services sector and a relatively lagging manufacturing sector. The share of service exports in total exports has grown to over 32 percent in 2013 from 28 percent in 2000. On the other hand, the share of manufacturing exports in total export has declined to 67 percent from nearly 80 percent during 1990-2013.
 
The growth in service exports has been more rapid, resulting in the share of services exports in total exports to increase rapidly over the last decade. This can be explained by technological changes. Many services do not require face-to-face interaction, and can be stored and traded digitally. These services are called modern services. Modern services are the fastest growing sector of the global economy. This is particularly evident in India, where modern services exports account for nearly 70 percent of the total commercial services exports (compared to around 35 percent in EMs) (see Figure 1). 
      
Figure 1. Rapid Growth in Modern Services from India

Supporting land rights helps us build stronger, more prosperous communities

Ede Ijjasz-Vasquez's picture
Land is an incredibly valuable asset that represents many different things. Land is, first and foremost, a place to call home. For many, it also serves as a critical means of production that they depend on for their livelihoods. Finally, land is inextricably linked to a community's history and culture.
 
Yet, as important as land ownership may be, 70% of the world's population still lacks access to proper land titling or demarcation. This carries a host of negative consequences: when people have to live with the constant threat of potential eviction, they are more likely to remain or become poor, and cannot invest in their land with confidence.
 
Conversely, stronger land rights can be a powerful tool for economic development and poverty reduction. That is why the World Bank is working with client countries to build legal and institutional frameworks that effectively protect land tenure - including for vulnerable groups such as women and indigenous peoples.
 
In this video, World Bank Practice Manager Jorge Muñoz describes in greater depth how the institution is bolstering land tenure around the world as part of its mission to eliminate poverty and boost shared prosperity.

Now's the time to make value-based property taxation happen in Europe and Central Asia

Mika-Petteri Torhonen's picture
Photo: Kyrgyz Republic – Mika Torhonen
The World Bank has supported land reform, land administration, and land management projects in 24 countries in the Europe and Central Asia region (ECA) since the 1991 dissolution of the Soviet Union and Central European socialist countries. This has been a period of catalyzed, unprecedented political, economic, and social changes and also a remarkable success story in creating private property rights, and developing land registration and cadastre systems. The results are becoming visible. According to the 2016 Doing Business Index, 7 of the 10 best- performing property registers are found in ECA countries. It is time to think next steps and how to best utilize these data repositories for development.

Determined to deliver: Private-sector ingenuity boosts public-sector results, through executive 'delivery units'

Christopher Colford's picture

Innovation is the Holy Grail of governance practitioners worldwide – but, when it comes to public-sector management, is there truly a “science of delivery”? Politics is “the art of the possible,” and governing often seems to be more a skilled craft than a predictable science – requiring an ad hoc alchemy of persuasion, pressure, guile and gumption.

Yet beyond its operational finesse or its scientific rigor, strong governance also requires something more practical – and perhaps more painstaking: diligent management. Improving government agencies’ performance is a key priority for policymakers, and private-sector-style thinking – especially about delivering cost-effective results, on time and on budget – can make a constructive contribution to public-sector management.

Public-sector leaders must always design finely tailored solutions that suit ever-shifting political moods, but they can also adapt the most deft techniques – many of them tested in the private sector – that emphasize achieving tangible results. With a blend of the private sector's can-do drive and the public sector's focus on accountability, an imaginative crosscurrent of ideas enlivened a recent “deep dive” conference at the World Bank that explored a relatively new management mechanism: the results-focused executive “delivery unit.”

The World Bank Group’s Governance Global Practice (GGP) teamed up with a global nonprofit foundation, the Centre for Public Impact (CPI), to convene an expert group exploring this recent innovation in public-sector management. The gathering – “The Future of Delivery Units: Accomplishments, Challenges and New Directions for Reforms at the Center of Government” – was co-sponsored by the President’s Delivery Unit within the Bank Group.

The forum heard various perspectives from governance practitioners, political theorists and academic scholars, along with both practicing and former civil servants. Much of the conference-goers’ thinking also seemed to have been influenced by private-sector logic. The conference’s pragmatism was reassuring amid this year’s primal-scream spectacle, in all too many countries, of political dysfunction. For many good-government idealists, it’s been alarming to see the tumult in many once-stable, now-volatile developed economies where an advanced capacity for governing had seemed well-established.



Bob Beschel, the Global Lead of the Center of Government Global Solutions Group – part of the World Bank's Governance Global Practice – convenes the conference's opening session. Photo by Lana Wong.

The use of delivery units should be evaluated “in the context of management innovation,” as the conference chairmen – Bob Beschel, the Global Lead of the GGP’s Center of Government Global Solutions Group, and Adrian Brown, the Executive Director of CPI – told the participants. Indeed, such consulting firms as the Boston Consulting Group (which funds CPI) and McKinsey & Company have long aimed to bring private-sector-minded efficiencies to public-sector institutions. Having labored in those vineyards awhile, some years ago, I came to see how creatively cross-pollinating ideas can transfer knowledge about best practices among the public, private, social and academic sectors.

How to help communities protect their lands

Rachael Knight's picture
Kenya Land Alliance facilitates a meeting
with the community of Chara, in Tana
River county

The scale of the global land grab is staggering. While international actors have made excellent progress establishing complaint boards, issuing principles for responsible investment, and securing commitments from multi­national corporations, these protections do not chart a clear course of action that communities can follow to protect their lands and natural resources before an investor arrives seeking land. 

The problem is that once an investor arrives to “consult with” a community, it may be too late.  After a deal has been made in capital city conference rooms or in clandestine meetings between chiefs and company representatives, communities are forced on the defensive. At this point, all they can do is try to mitigate the negative impacts of investors' plans rather than assertively proclaiming their legal rights, demanding that the investor abide by FPIC principles, and then choosing whether to reject the investment or accept it on terms that ensure that the community benefits and prospers.

Meanwhile, many of the “investors” grabbing land are national or local elites unaccountable to international  institutions  –  the cousin of the President or the nephew  of the Minister – who operate with complete impunity, protected by powerful connections to government, the judiciary and the police. Such individuals do not answer to shareholders or complaint boards, and are not the least bit concerned with principles of corporate social responsibility. If a community’s land claims  are unrecognized or undocumented – and if the community’s leadership is weak or corrupt – the easier it is for these elites to manipulate their power to claim what land they want.

To have a fighting chance against elites’ bad­faith actions, communities must proactively take steps to know and enforce their rights, prevent their leaders from transacting land without community approval, and seek legal recognition of their land claims.  And they must do so before elites and investors arrive. 


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