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Law and Regulation

ECOWAS, CET, and EPA – let’s take the debate to where the action is

Erik von Uexkull's picture

Road near Zaria, Nigeria. Source - pjotter05The Economic Community of West African States (ECOWAS) is making some real progress in regional integration. After decade-long negotiations, it has just launched its own Common External Tariff (CET), and now a final proposal for an Economic Partnership Agreement (EPA) with the European Union is also on the table.

However, vast differences in opinion remain regarding the likely effects of these reforms. In Nigeria—a key player in the region— debate is currently lively as to whether the country should sign the EPA, with some local stakeholders wary of the proposed reduction in trade protection.

Noting these concerns, the World Bank Group recently shed more light on the anatomy of these trade shocks. By analyzing detailed trade and firm data in a simple short-term framework, we were able to pick up details that are important determinants of how the reforms might play out—even in the longer run. The full reports can be found here, along with a non-technical policy note.

So what did we find?

Beyond Courts: Using a justice lens to address conflict, fragility and violence

Hassane Cisse's picture
Gaza. Displaced Persons. World Bank
Gaza. Displaced persons. Photo: © Natalia Cieslik / World Bank

From civil wars in Mali and Iraq to urban crime in Central America, perceptions of injustice are central to fueling violence and fragility. While we in the development community increasingly recognize that legitimate and effective justice institutions are crucial to inclusive growth in these contexts, we have often struggled to support them. The World Bank is at the forefront of developing new ways of understanding justice challenges as well as practical means to address them. 

A panel on “New Approaches to Justice in FCV,” part of the 2015 Fragility Forum, highlighted new ways of understanding and responding to justice challenges.

When less is more: How Serbia could deliver better justice with fewer judges

Georgia Harley's picture
In courts across Europe, there is a common refrain: “we need more judges!” Your court has a backlog? Many hands will make light work. Your courts are out of touch? Let’s bring in some new blood.
 
Serbia, however, has the opposite problem. Serbia has too many judges. And the implications for system performance, service delivery, and justice reform are significant.
 
So how many is too many?

When less is more: How Serbia could deliver better justice with fewer judges

Georgia Harley's picture
When less is more: How Serbia could deliver better justice with fewer judges
 
In courts across Europe, there is a common refrain: “we need more judges!” Your court has a backlog? Many hands will make light work. Your courts are out of touch? Let’s bring in some new blood.
 
Serbia, however, has the opposite problem. Serbia has too many judges. And the implications for system performance, service delivery, and justice reform are significant.
 
How many is too many?
 

The growing popularity of justice impact evaluations in developing countries

Nicholas Menzies's picture
Source: billsonPHOTO 


I was lucky to recently attend a workshop on justice and governance impact evaluations in the wonderful city of Istanbul. The spark of the workshop discussions lived up to the liveliness of the location.

Some time ago I blogged about the pros and cons of impact evaluations for justice projects in developing countries.  Since then, interest in impact evaluations in the justice sector has grown at the World Bank and within the larger development community. 

Justice proposed for sustainable development goals

Heike Gramckow's picture
​Source UN, 2014. The Road to Dignity by 2030: Ending Poverty, Transforming All Lives and Protecting the Planet

This year will see a major milestone with the adoption of sustainable development goals (SDGs) by the UN’s member states. Expanding on the 8 Millennium Development Goals (MDGs) set in 2000, the currently envisioned 17 SDGs are aiming to address broader, transformative economic, environmental and social changes. For the first time, however, the centrality of justice in achieving sustainable development has been recognized in the Open Working Group’s proposed Goal 16:
 
Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels.
 
The mention of justice, governance and peaceful societies in the SDGs is seen as an important step, but one that will pose many challenges. Secretary General Ban Ki-Moon has put his support behind the inclusion of justice as a central pillar for achieving sustainable development.

Can Court Fee Waivers Open the Door for Justice in Serbia?

Georgia Harley's picture
The courts are open and justice is blind, or so they say. But if you’re poor, the courts may be beyond your reach. How can you protect your rights if you cannot afford to walk through the door of the courthouse?

In many countries, courts offer to waive their fees to anyone who can demonstrate that they cannot afford them.

Whilst it is true that fee waivers will not overcome profound barriers to access to justice, they do provide an important safety net for the poor to access essential services. And by helping the poor to pursue their rights, the courts can help to level that unequal playing field that is the courtroom.

In Serbia, providing court fee waivers are particularly pertinent.
 

Can Court Fee Waivers Open the Door for Justice in Serbia?

Georgia Harley's picture
The courts are open and justice is blind, or so they say. But if you’re poor, the courts may be beyond your reach. How can you protect your rights if you cannot afford to walk through the door of the courthouse?

In many countries, courts offer to waive their fees to anyone who can demonstrate that they cannot afford them.

Whilst it is true that fee waivers will not overcome profound barriers to access to justice, they do provide an important safety net for the poor to access essential services. And by helping the poor to pursue their rights, the courts can help to level that unequal playing field that is the courtroom.

In Serbia, providing court fee waivers are particularly pertinent.
 

The Specter Haunting Davos – Piketty as ‘Banquo’s Ghost’: Reforming 'the Mercenary Society' via an Energetic Agenda

Christopher Colford's picture



Metaphor of the month, via a deft dispatch from Davos: Thomas “Piketty was not in attendance this year – which was like putting on ‘Hamlet’ without the Prince” of Denmark, quipped Larry Elliott, the economics editor of The Guardian, as he needled ostentatious Davos-goers for only half-heartedly living up to the Davos dictum  of being “ ‘committed to improving the state of the world,’ provided nothing much changes.” 

Let’s shift the Shakespearean citation slightly, from “Hamlet” to “Macbeth”: Like Banquo’s ghost, the specter of Piketty’s analysis of inequality and injustice seemed to haunt many private-sector leaders at Davos this year – and thus the scholar from the Paris School of Economics didn’t need to be present in order to have a powerful impact at this year’s World Economic Forum.

Amid last week's self-exculpatory denialism from the unrepentant-oligarch wing of the Davos Man culture, one could almost hear the apologists for plutocracy and the free-market fatalists joining the conscience-stricken Macbeth in shrieking to Banquo's implacable apparition: “Thou canst not say I did it! Never shake thy gory locks at me!

The Davos 2015 parade of plutocrats may have been worth all the time and trouble, after all – despite its customary spectacles of self-indulgence – if the pageantry helped pique the conscience of some of the One Percenters and their courtiers, at least momentarily. “Most of the conversations between chief executives here are about Piketty-type issues. They talk about things [at Davos that] they wouldn’t be talking about back in the boardroom,” one eminent corporate leader told Elliott of The Guardian. Piketty-inspired concerns about inequality – along with fears of chronic economic stagnation and an irretrievably despoiled planetseem likely to inform this year’s top-level global policy forums, from Addis Ababa in July to the United Nations in September to Paris in December.
 
Signaling that many private-sector leaders have been awoken by, and are responding to, Piketty's landmark analysis of the intensifying concentration of capital in ever-fewer hands – which is provoking a more rigid stratification of society along hardening lines of social class – the World Economic Forum itself set the stage for Davos 2015 by publishing a 14-point agenda for promoting more inclusive growth. That analysis, searching for constructive solutions, is certainly a welcome contribution to the debate. Yet Piketty’s analysis of the widening gaps between the ultra-wealthy and everyone else – with Davos as perhaps an inadvertent self-parody of the cocooned Uber One Percent – suggests that there’s scant hope for mending a torn society unless policymakers enact policy changes on a vast scale: by (among other priorities) adopting greater progressivity in tax rates and enforcing a crackdown on cross-border tax evasion.

(An aside, regarding those who quibble with a point of Piketty-era terminology – and those who have attempted, and have conspicuously failed, to refute Piketty’s logic. Using a chicken-and-egg argument, some theorists lament the Piketty-inspired focus on the term “inequality,” insisting that inequality may be the outgrowth of, rather than the cause of, economic stagnation and social stratification. Fair enough. Yet such casuistry dwells on a distinction without a practical difference. Enacting pro-growth programs to avoid “secular stagnation” would surely be wise policymaking. Yet no serious plan would envision going back to a pre-2008-style “GDP growth at any cost” approach. The global financial crisis of 2008 revealed the recklessness of simplistic gun-the-engine, GDP-uber-alles policies that produce merely unsustainable, low-quality growthToday’s pragmatists, instead, champion a more inclusive economy that eases social divisions and sustains broader opportunity – promoting what the World Bank Group calls “shared prosperity.”)

Judging by Piketty’s esteem among Davos 2015 participants, most leaders of the private sector – all but a recalcitrant few, some of whom dwell on the free-market fundamentalist fringe – have evidently gotten the message (at last): Chronic inequality and stifled social mobility have reached a socially intolerable and perhaps politically destabilizing intensity. Yet if all but an eccentric remnant in the private sector “get it,” do public-sector policymakers – many of whom seem ever-eager to do the bidding of the most self-aggrandizing monied interests? The Davos-style ideal of “capitalism for the long term” is motivated by “enlightened self-interest,” yet many boardrooms – and those politicians who are forever at their beck and call – apparently need still more enlightenment and less self-interest.

Charting the next steps beyond Piketty's “Capital in the Twenty-First Century" – advancing from academic analysis to social action – will be the next order of business in 2015, a year with parliamentary elections in several pivotal countries. Just in time for the post-Davos and pre-election season, a newly published book seems poised to pick up where Piketty left off: emphasizing that society needs a healthier balance between private-sector dynamism and public-sector activism, undergirded by a humane sense that an economy with truly shared prosperity should prioritize social fairness.

With their appetites whetted by early excerpts published this week in The Observer, many admirers of Piketty will be eager to read “How Good We Can Be: Ending the Mercenary Society and Building a Great Country” by Will Hutton, the principal of Hertford College, Oxford. Hutton – for all his gloom about the injustices inflicted on his native United Kingdom over the past 35 years – advances an optimistic agenda that might show the way toward correcting decades’ worth of policy errors.

“Inequality has become a challenge to us as moral beings,” declares Hutton, reinforcing Piketty’s view of a society starkly stratified by social class. A callousness toward social divisions has spilled over from the economic realm into political decision-making, resulting in an “amoral deficit of integrity” – and Hutton is not shy about pointing to a specific turning point, or about naming a specific name.

“Ever since [Margaret] Thatcher’s election in 1979, Britain’s elites have relegated concerns about inequality below the existential question of how to restore our capitalist economy to economic health, a matter deemed to transcend all other considerations,” writes Hutton. “The language of the socioeconomic landscape has been commanded by words like efficiency, productivity, wealth generation, aspiration, entrepreneur, pro-business and incentives. To the extent they are significant at all, preoccupations with inequality have been seen as of second-order importance.”

The “raw trends” of the weakened power of wage-earners and the strengthened dominance of capital-owners – the outgrowth of Piketty’s iconic formula, r>g – “are then exacerbated by the reduction of taxation on capital, companies and higher earners in the name of promoting incentives and 'wealth generation.' " No wonder, Hutton asserts, that the United Kingdom has suffered “a stunning increase in inequality, the fastest in the OECD.”

Readers who were drawn to Piketty’s logic – yet who were left by "Capital" with a despairing feeling of “where do we go from here?” – are likely to warm to Hutton’s work, which extends the logic of his influential 1995 analysis, “The State We’re In.”

“Indifference to the growing gap between rich and poor, in all its multiple dimensions, is the first-order-category mistake of our times," warns Hutton. "No lasting solution to the socioeconomic crisis through which we are living is possible without addressing it.”

Recalling his years of energetic columns in The Guardian and The Observer, Hutton’s activist economic prescription in “How Good We Can Be” seems likely to include a better-focused approach to industrial policy; targeted investment in innovation capacity; pro-entrepreneurship mechanisms to sharpen competitiveness; and pro-active tax policies that ease rather than intensify the wealth divide.

Many of those who missed this year’s Davos triumph of Piketty-style reasoning are now awaiting the arrival of Hutton’s new book on this side of the Atlantic. Piketty scored the scholarly sensation of 2014 with the publication of “Capital.” My early hunch is that Hutton, with “How Good We Can Be,” just might achieve a similar agenda-setting success in 2015.
 

#TakeOn Inequality


 

Foreign Investment Policy: Encouraging news from China

Xavier Forneris's picture

The Investment Policy team of the World Bank Group’s Trade & Competitiveness (T&C) Global Practice has learned that China is about to adopt a new foreign investment law that would bring about several potentially significant improvements to the current investment regime. Although we have not yet seen an English-language version of the proposed law, and therefore have to rely for the moment on accounts by international law firms and chambers of commerce that have seen (and sometimes commented on) the draft law, I wanted to share the news with the Private Sector Development community because of the new law’s potential impact – not just in China but across East Asia.
 
China has very significant political and economic clout in the region and across the developing world. Its reforms are closely watched, and they could inspire many other developing and emerging economies to follow suit.
 
After soliciting comments on the three existing laws, China’s Ministry of Commerce (MOFCOM) issued a draft of the Foreign Investment Law on January 19, also soliciting public comment – a process that, incidentally, should also inspire many countries.
 
If passed, the new law would abrogate and ‘unify’ the three current laws that regulate foreign investment: namely, the Sino-Foreign Equity Joint Venture Law, the Wholly Foreign-Owned Enterprise Law and the Sino-Foreign Contractual Joint Venture Law. Although going from three laws to one can in itself be a positive thing – simplifying the regulatory environment usually is a good idea – what really matters to the investor community is the substantive or procedural changes that the new law would introduce.
 
A first change is that the new law would adopt a “negative list” approach, modeled on the system in place in the Shanghai Pilot Free Trade Zone (FTZ). As a reminder: Under a negative-list approach, certain sectors where foreign investment is restricted, capped or prohibited are specifically enumerated on a negative list. And foreign investment in restricted sectors can only proceed through some sort of ex ante screening and approval mechanism by a governmental authority or agency. On the other hand, under such a system, investments in sectors that are not on the negative list can usually proceed without any prior screening and approval, using, for example, the normal company registration process.
 
The negative-list approach is one that T&C’s Investment Policy Team often recommends to our client countries, because it fosters transparency and predictability and because it reduces government discretion over the admission of investors. Obviously, in this case, we would need to see the actual negative list before we can offer a more definitive assessment. But assuming that the number of sectors on the negative list is not excessive or, better, that sectors previously closed or restricted are now open to Foreign Direct Investment (FDI), the impact of this single change could be very significant.


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