We know corruption in developing countries affects poor people the most. It also impacts firms in many ways.
We know corruption in developing countries affects poor people the most. It also impacts firms in many ways.
The investigation, indictment, and arrest of several FIFA officials sends a simple and powerful message: No matter how untouchable an entity seems to be, in today’s world no organization, company, or government is immune from public scrutiny and law enforcement when it comes to allegations of fraud and corruption. Tolerating corruption as a “cost of doing business” is quickly going out of fashion.
The World Bank works hard to tilt the equation in favor of clean business in its fight against poverty. We investigate and hold perpetrators accountable when we receive allegations of wrongdoing in projects. Since we began this work, we have sanctioned more than 700 firms and individuals for misconduct in our projects. Most of these sanctions involve some form of debarment, rendering persons and firms ineligible to bid on future Bank-financed contracts. We recently released an updated review of our experience in investigating and adjudicating fraud and corruption cases, and it shows that it’s possible to tackle corruption in a way that is efficient, effective and fair.
Using the Trade Competitiveness Diagnostic Framework – which we presented today to the Uruguayan public and private sector – a World Bank team examined the performance of Uruguayan firms in global markets in terms of export growth, diversification, quality upgrading and survival;. The team presented a number of recommendations to increase integration and to gain from it.
The main findings of the report reveal the following:
The White Nile in South Sudan. Photo by Steve Utterwulghe.
As I was landing in Juba, the bustling capital of South Sudan, I couldn’t help but reminisce about my days working in Khartoum for the UN Deputy Special Representative of the Secretary General. The war between the North and the South, of what was then, in 2004, still the Sudan, was raging as the peace negotiations were taking place in a plush resort on the shores of Lake Naivasha in Kenya. I was mainly focusing on guaranteeing access to the people of the Nuba Mountains, one of the three fiercely contested areas between Khartoum and the Sudan People’s Liberation Movement/Army (SPLM/SPLA). I was doing my fair share of shuttle diplomacy, going back and forth between the SPLM/SPLA leadership based in Nairobi and the Government of Sudan in Khartoum. At that time, hopes were high that one would soon see the end of decades of a bloody war in Africa’s largest country. The Comprehensive Peace Agreement was finally signed in 2005. In 2011, South Sudanese participated in a referendum and 99 percent voted for independence. South Sudan became the newest country in the world.
But what should have been a new era of peace and prosperity quickly turned into a feeling of dejà vu. Dreams were shattered as a new internal violent conflict broke out in December 2013, putting the progress achieved at significant risk and disrupting economic activities and livelihoods.
The country is very rich in natural resources, including oil, minerals and fertile arable land. However, with 90 percent of its population earning less than US$1 per day, South Sudan is ranked as one of the poorest countries on the planet. South Sudan remains an undeveloped economy facing important challenges, including high unemployment, weak institutions, illiteracy and political instability. The economic overview of the country by the World Bank suggests that “South Sudan is the most oil-dependent country in the world, with oil accounting for almost the totality of exports, and around 60 percent of its gross domestic product.” The conflict has dramatically affected the production of oil, which has fallen by about 20 percent and is now at about 165,000 barrels per day. This, combined with the sharp global drop in oil prices, has greatly affected the fiscal position of the government.
In such an environment, private sector development is a must, since it has the potential to create market-led jobs and growth. However, private sector growth requires a conducive investment climate and an enabling business environment.
South Sudan has made progress in this area, thanks in part to support from the international community, including the World Bank Group. Yet more needs to be done. South Sudan ranks 187th out of the 189 economies in the Doing Business ranking, just ahead of Libya and Eritrea. In addition, among the top constraints reported by firms in the World Bank Group's Enterprise Survey, 68 percent mention political instability and 58 percent cite access to electricity, followed closely by access to land and finance.
2015 continues to be a decisive year for Internet governance. As in 2014 with the passage of Marco Civil and the NETmundial Meeting, Brazil is again in the focus of this year’s developments as the tenth meeting of the UN Internet Governance Forum (IGF) will convene in João Pessoa in November. Titled “Evolution of Internet Governance: Empowering Sustainable Development,” in anticipation of this year’s IGF, human rights advocates have already begun to ask whether Brazil’s approach to internet governance might serve as a model for the rest of the world.
Brazil 2014: Marco Civil and NETmundial
In April 2014, a Global Multistakeholder Meeting on the Future of Internet Governance, also known as NETmundial, was hosted by the Brazilian government in São Paulo. NETmundial brought together over nine hundred attendees from governments, international organizations, the private sector, and civil society and resulted in the adoption of a (non-binding) Internet Governance Roadmap. Following the meeting, a number of pieces reviewed and commented on NETmundial’s outcome and final documents. The Center for Global Communication’s Internet Policy Observatory, for example, published Beyond NETmundial: The Roadmap for Institutional Improvements to the Global Internet Governance Ecosystem to explore how sections of “NETmundial Multistakeholder Statement” could be implemented. The meeting also played host to a series diverging narratives not only between governments, States, and civil society, but also among various civil society actors.
Greater competition is crucial for creating better jobs, although there may be short term tradeoffs.
Job creation on a massive scale is crucial for sustainably ending extreme poverty and building shared prosperity in every economy. And robust and competitive markets are crucial for creating jobs. Yet the question of whether competition boosts or destroys jobs is one that policymakers often shy away from.
It was thus valuable to have that question as a central point of discussion for competition authorities and policymakers from almost 100 countries – from both developed and developing economies – who recently gathered in Paris for the 14th OECD Global Forum on Competition (GFC).
According to World Bank Group estimates the global economy must create 600 million new jobs by the year 2027 – with 90 percent of those jobs being created in the private sector – just to hold employment rates constant, given current demographic trends.
Yet the need goes further than simply the creation of jobs: to promote shared prosperity, one of the urgent priorities – for economies large and small – is the creation of better jobs. This is where competition policy can play a critical role.
Competition helps drive labor toward more productive employment: first, by improving firm-level productivity, and second, by driving the allocation of labor to more productive firms within an industry.
Moreover: Making markets more open to foreign competition drives labor to sectors with higher productivity – or, at least, with higher productivity growth. Making jobs more productive, in turn, generally increases the wages they command.
That’s in addition to cross-country evidence on the impact of competition policy on the growth of Total Factor Productivity and GDP, and the fact that growth tends not to occur without creating jobs. Thus there’s compelling evidence that – far from being a job killer, as skeptics might fear – competition (over the long term) has the potential to create both more jobs and better jobs.
The key question then becomes whether such long-term benefits must be achieved at the expense of short-term negative shocks to employment – especially in sectors of the economy that may experience sudden increases in the level of competition.
Progress toward better jobs is driven partly by the disappearance of low-productivity jobs, as well as the creation of more productive jobs in the short run. Competition encourages that dynamic through firm entry and exit, along with a reduction in “labor hoarding” in firms that have previously enjoyed strong market power.
Should I play it safe and join a governance team or risk being a lone voice in a sea of economists and private sector staff? This was my dilemma as a DFID Governance Adviser returning to the UK after a stint in East Africa. I gambled and joined the growth specialists in DFID’s newly created Economic Development arm. A year in, I now think differently about the relationship between growth and governance.
Eradicating poverty will not be possible without high and sustained growth that generates productive jobs and brings benefits across society. Historically, this has included boosting productivity within existing sectors as well as rebalancing economies towards more productive sectors (e.g. from agriculture to manufacturing). Such structural change or economic transformation has lifted millions from poverty.
Economic transformation can have a strong disruptive effect on political governance – giving rise, for example, to interest groups that push for accountable leaders and effective institutions. As countries get richer, more effective institutions also become more affordable. Over time, economic transformation can therefore advance core governance objectives.
But this is easier said than done. Economic development is an inherently political process that challenges vested interests. Often the surest ways for elites to hold onto power and profit aren’t in step with measures to spur investment, create jobs and foster growth. Shrewd power politics can be bad economics.
Sri Lanka is in many ways a development success story.
Growth of income per person in Sri Lanka has averaged a little more than 7 percent a year over the past five years. That follows average growth of just over 5 percent a year in the preceding nine years. Among the six largest South Asian countries, Sri Lanka has the highest level of economic output per person. With sustained high growth, Sri Lanka has largely eradicated extreme poverty.
All this success has helped propel the country towards middle-income status. Going forward, how successfully Sri Lanka manages its cities will determine how quickly and efficiently the country moves to higher middle-income status and beyond. Every high-income economy has achieved this status through urbanization.