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Private Sector Development

Can other cities be as competitive as Singapore?

Sameh Wahba's picture
 Joyfull/Shutterstock
Photo: Joyfull/Shutterstock
Singapore is an example of one of the most competitive cities in Asia and in the world. Many, many other cities want to be the next Singapore. In fact, Singapore has been so successful that some believe that its success cannot be emulated. They forget that in the 1960s, Singapore faced several challenges – high unemployment, a small domestic market, limited natural resources, not to mention that most of the population lived in overcrowded unsanitary conditions in slums. Challenges that would sound very familiar to a large number of cities in the developing world.

And so, what better place than Singapore for the Asia Launch of the Competitive Cities for Jobs and Growth: What, Who & How report. The World Bank Group, along with the Centre for Liveable Cities and International Enterprise Singapore co-sponsored the launch as part of Urban Week held in Singapore from 8-11 March, 2016. The roundtable was attended by over 100 delegates representing cities from 23 countries.

The competitiveness potential for cities is enormous. Almost 19 million extra jobs, annually, could be created globally if cities performed at the level of the top quartile of competitive cities. Of this potential, more than 1/3, i.e. equivalent to an additional 7 million jobs, comes from cities in East Asia. Between 2000 and 2010, nearly 200 million people moved to East Asia's urban centers – these people will need jobs. Where will these jobs come from? How will they be generated?

Out of the shadows? Are firms more likely to formalize through tax simplification programs?

Caio Piza's picture
Red tape can be a significant barrier to having informal firms formalize and eventually benefit from any business support programs provided by governmental agencies. While the relationship between this formalization, access to finance and a firm’s performance has been implied by anecdotal evidence (de Soto 1989 and 2000), a recent survey of empirical evidence suggests that such programs may in fact achieve the opposite and not necessarily nudge firms to formalize. In fact, the evidence suggests that even with a significant reduction in red tape most informal firms decide to remain informal (see Bruhn and McKenzie 2013 for a survey).
 

On digital revolution, skills and the future of communications

Tako Kobakhidze's picture

WDR2016

We find ourselves in the midst of the greatest information and communications revolution in human history. I’m not the author of this phrase, but I fully agree with it. This particular sentence made me read the entire overview of the World Development Report 2016: Digital Dividends.

I have always been wondering what does the Digital Revolution actually mean. Who, but the Co-Director of the report could have answered my question best?! Yes, I had the opportunity to interview Uwe Deichmann last week in Tbilisi. He visited Georgia as part of the ‘road-show’ to present this work of the World Bank Group team to the government, business, academia, students, and other interested audience attending the Business Forum: Innovation and Digital Economy.

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.


Kenyan firms benefit from increased use of financial services and lower crime-related losses

Silvia Muzi's picture

The private sector continues to be a critical driver of job creation and economic growth. However, several factors can undermine the private sector and, if left unaddressed, may impede development.  Through rigorous face-to-face interviews with managers and owners of firms, the World Bank Group’s Enterprise Surveys benchmark the business environment based on actual experiences of firms.

This blog focuses on surveys conducted of 781 Kenyan firms across five regions (including Nairobi and Mombasa) and six business sectors—i) food, ii) textiles and garments, iii) chemicals, plastics and rubber, iv) other manufacturing, v) retail, and vi) other services.

Under Kenya’s new constitution, the country recently embarked on several major business reforms that promoted a more market-friendly environment. Some examples of positive benefits include boosts in public investment in infrastructure, increased interest from foreign investors, and lowered transaction costs from information technology improvements. The Kenya Enterprise Surveys sheds light on how the country’s private sector fared amidst these reforms.

More firms use financial services than before

According to the Kenya Enterprise Surveys (ES) data, the use of financial services has improved since 2007.  On average, 44% and 41% of Kenyan firms use banks to finance investment and working capital, respectively. The corresponding figures in 2007 were much lower at 23% and 26%. Moreover, the percentage of Kenyan firms with a bank loan is 36%, which is on par with the global average yet higher than the average of countries in the same income group (do note that when this survey was conducted, Kenya was classified as a low income country, having since graduated to a lower middle income country).

Going beyond goods: Measuring services for export competiveness

Claire H. Hollweg's picture

The simplest way to think about international trade is the transfer of goods – cars, clothing, bananas. Countries that export more goods are generally better off, because they’re earning money, which allows them to import and build their economies in the process. But services are also vital to exports. In fact, services play a dual role in building an economy’s export competitiveness.

For one, services matter for manufacturing and agriculture exports. Take tee-shirts for example. Sure, they’re made of cotton, but they’re also the result of many service industries. This can include transporting cloth to the factory, tee-shirt design, testing to ensure quality standards are met, and branding and marketing for sale on international markets. All are part of the tee-shirt exporting process. [1]

The second role services play in export competitiveness involves diversification. With cost reductions and technological progress, services have become more tradeable. Exporting services provides an opportunity for export diversification and growth, which is important for economic stability. If global demand for one sector drops, a country with diversified exports can rely on others such as banking, transport, or business services.

Many governments are interested in how services support their country’s exports and economy at large. For example, how much value added do services exports, such as transport or communications, generate in a country? And how much of that is generated directly versus indirectly as inputs like transportation in our tee-shirt example? What types of services inputs, and is that different from comparator countries?

Answers to such questions are typically left unanswered because systematic data is not readily available on how services contribute to exports across developing countries and sectors.

The Export of Value Added (EVA) Database was developed to fulfill this need. The database was recently launched on the World Bank Group’s World Integrated Trade Solutions (WITS) data website. It includes data for user-specific queries and also has data for bulk download.

The EVA Database measures the domestic value added contained in exports for about 120 economies across 27 sectors, including nine commercial services sectors, three primary sectors, and 14 manufacturing sectors. The data spans intermittent years between 1997 and 2011.

What sets the EVA Database apart is the wide coverage of developing countries: over 70 of the economies included are low- and middle-income.

Jordanian venture aims to use technology to empower refugees

Christine Petré's picture
Loay Malahmeh, a co-founder of 3D Mena

The organization Refugee Open Ware is on a mission to empower refugees by giving them access to new technologies, such as 3D-printing. “We want to raise awareness about what 3D-printing can do,” explains Loay Malahmeh, a co-founder of the Jordanian company, 3D Mena and a partner in Refugee Open Ware. “How it can not only solve real problems, but also unleash immense, untapped potential.”

So what can be done to contain volatility and spur growth in these countries?

Francisco G. Carneiro's picture
Understanding Macroeconomic Volatility: Part 5. Read parts 1-4 here


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