On a recent trip to the Caribbean, I was in a meeting at the Ministry of Finance of one of the region’s largest economies. The topic under discussion was all too familiar: the difficulty of attracting overseas investment into the country’s public infrastructure projects.
To enliven things, I began thinking aloud about an idea I’d been musing on for a while and was asked to outline my idea. Let me first set the context.
What would you expect in a mineral rich developing country? High Government revenues from the mineral resources? Not always, and definitely not in the case of Zambia - until recently.
Zambia has a considerable wealth of mineral resources and its economy depends heavily on these minerals. Zambia's primary export, copper and copper-related products, account for as much as 77% of the country's exports.
PPPs are designed to achieve improved access to assets, infrastructure and services over a significant number of years. They should have clearly identified objectives, specified outcomes, clear programs of investment over time, and relationships and performance targets to bring to life the Social and Economic Value Equations that underpin them.
Burkina Faso has embarked on a journey to put public data infrastructure at the heart of social and economic development. But what does this mean? And why should ICT and digital data be a priority when a large segment of your population still cannot access to the internet? This is precisely the question that the upcoming World Bank-funded eBurkina project is meant to answer.
Burkina Faso, a low-income landlocked country in West Africa, has the ambition to reform public administration differently. More specifically, the country sees ICT and digital innovation as a key opportunity to accelerate development and meet the objectives of its national development strategy (PNDES). This approach is consistent with the World Development Report 2016 on Digital Dividends, which found that, when used properly and with adequate policy interventions, ICTs can be a powerful tool for social and economic development.
The Public-Private Partnership (PPP) concept is actually not very complex. You take the best of the public sector and the best of the private sector, put them together and – voila! The sum of the parts is greater than the whole, 1+1=3, more efficiency, more investment, with public oversight and support. PPPs are not for dumping a problem on the private sector. The problem still belongs to the government, only with a new partner, the private sector, to help resolve it.
So, if the logic is so simple, why do many countries perform so poorly when implementing PPPs?
The World Bank Group just launched a new open data platform for trade and competitiveness – TCdata360. Try it today and share your visuals on Twitter with the hashtag #TCdata360.
Open data – statistics that are accessible to all at little or no cost – is a critical component of global development and the World Bank Group’s twin goals of ending poverty and boosting shared prosperity. How can we measure progress towards our objectives without a method of tracking how far we’ve come?
In the Northern tip of Mauritania lies the Nouadhibou Free Zone. Created in 2013 with financial and technical support from the World Bank, the first international partner to do so, it benefits from a 110-kilometer coastline on the Atlantic Ocean and an exclusive economic zone of 230,000 square kilometers. Its waters are among the most seafood-rich in the world, with a capacity of 1,500,000 tons per year.
The free zone offers investment opportunities in industries, logistics, tourism, retail business and tertiary sectors. However, creating a competitiveness hub in the fishing sector is one of the paramount objectives of the zone, given the importance of the sector for the Mauritanian economy. It represents 5.8 percent of the GNP, accounts for 18 percent of the total exports, and contributes to an estimated 40,000 jobs.
In March 2016, the World Bank approved the Nouadhibou Eco-Seafood Cluster Project (Projet Eco-Pôle Halieutique) with an International Development Association (IDA) grant of $7.75 million out of a total project amount of $9.25 million.
The objective of the project is to support the development of a fishing-sector hub in the Nouadhibou Free Zone aimed at promoting the sustainable management of fisheries and creating prosperity for the local communities.
While the Free Zone has already achieved critical results — such as the attraction of a few international investors in food processing and fish exports, the completion of commercial viability studies of the deep-seawater port and the airport, and the elaboration of a draft law on public-private partnerships (PPPs) — some constraints affecting more specifically the fishing sector remain. They include, among other things, the lack of productive diversification, an integrated value-chain, know-how about certification and international standards, and the octopus fishing quota system.
In addition, the lack of structured dialogue among the various public and private stakeholders in the fishing sector had been identified as a fundamental impediment to the development of the hub’s competitiveness.
Louise Cord, the World Bank Country Director, who recently visited Nouadhibou to officially launch the project with the President of the Free Zone, commended the Free Zone Authority for creating a Public-Private Dialogue (PPD) Task Force in 2015.
In today’s globalized world, a corporation might have a retail store in one country, a factory in another, and financial services provider in yet a third.
Corporate interconnectedness has brought investment and growth, to be sure, but it has also added complexity to the work of tax authorities. Increasingly, developing-economy governments come face-to-face with corporations that employ sophisticated strategies with the aim of paying fewer taxes. With our recently published handbook, "Transfer Pricing and Developing Economies: A Handbook for Policy Makers and Practitioners,” we hope to support efforts to protect countries’ corporate tax bases.
State capacity is clearly fundamental to development, and the motivation and productivity of the personnel working in the state is clearly fundamental to state capacity.
Government bureaucracies typically employ 15 to 30 percent of all workers, and 50 to 60 percent of formal sector or salaried workers in developing countries. This fact alone warrants a detailed understanding of the functioning of public sector labor markets and their influence on the broader labor market, particularly as the characteristics of public sector workers—their gender, age, and skills profiles, for instance—can be quite different from their private sector counterparts.
But more importantly, the motivation of government workers and thereby the productivity of government bureaucracies impacts almost everything else in an economy, from business regulations, to infrastructure provision, to the delivery of services.
Global competition to attract foreign and domestic direct investment is so high that nearly all countries offer incentives (such as tax holidays, customs duty exemptions and subsidized loans) to lure in investors. In the European Union, the 28 member states spent 93.5 billion euros on non-crisis State Aid to businesses in 2014. In the United States, local governments provided and average of US$80.4 billion in incentives each year from 2007 to 2012.
In order to better understand the prevalence of incentives worldwide, the Investment Climate team in the Trade & Competitiveness Global Practice of the World Bank Group reviewed the incentives policy of 137 countries. Results showed that all of the countries that were surveyed provide incentives, either as tax or customs-duty exemptions or in other forms. Table 1 (below) shows the rate at which these instruments are used across advanced and emerging economies. For instance, tax holidays are least common in OECD countries and are most prevalent in developing economies. In some regions they are the most-used incentive.
However, despite offering incentives, few countries meet all the requirements of a fully transparent incentives policy. These include: mandating by law, and maintaining in practice, a database and inventory of incentives available to investors; listing in the inventory all aspects of key relevance to stakeholders (such as the specific incentive provided, the eligibility criteria, the awarding and administration process, the legal reference and the awarded amounts); making the inventory publicly available in a user-friendly format; requiring by law the publication of all formal references of incentives; and making the incentives easily accessible to stakeholders in practice. A T&C study now under way on incentives transparency in the Middle East and North Africa (MENA) region showed that none of the eight countries analyzed has a fully transparent incentives policy. (See Graph 1, below.)