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Financial Education: What Works and What Doesn’t?

Margaret Miller's picture

How can we successfully design programs to promote financial literacy and financial capability – that is, not just financial knowledge in the abstract, but also the practical skills, attitudes and behaviors needed to take care of one’s everyday finances? Amid the wide-ranging scholarship on financial education, researchers have documented that there is often a strong relationship between exhibiting financial knowledge and achieving good financial outcomes (such as saving for retirement, paying bills on time or avoiding mortgage default).

Western Balkans: Through Science, Innovation and Collaboration, a Program for Shared Prosperity

Paulo Correa's picture


 

You’d probably be skeptical if I told you that the Western Balkans – a region that has long suffered from social and ethnic fragmentation – now has a strong opportunity to boost shared prosperity by promoting research, innovation and entrepreneurship. Your views might not even change if I showed you that such idea is validated by preliminary studies linking research and innovation to the performance of firms and countries in the region.

You might be surprised – yet your initial assumption might be unchanged – if I told you about the kind of companies that are starting to build a different economic landscape in the region: firms like UXPassion, Pet Minuta, Strawberry Energy or Teleskin, which are all technology-based startups created by young researchers who became entrepreneurs. Click on this link (http://www.worldbank.org/en/news/video/2013/10/22/western-balkans-research-and-development-for-innovation), or on the video embedded below, to meet them and other innovators from the Western Balkans.

Indeed, the transition to a market economy and the breakup of the former Yugoslavia starting in 1991 had a severe impact on the research and innovation sector in the Western Balkans. Research capacity narrowed significantly, and R&D’s links to the productive sector of the economy disappeared. The new industrial structure has naturally a lower propensity to invest in research while the current business environment promises low returns to the enterprise investments in innovation. Efforts to revamp the region's research and innovation sector were most of the time short-lived.

As a result, the performance of the research and innovation sector in the Western Balkans is gloomy. The region’s current investment in R&D are roughly the same amount as the investment by just the second-largest university in the United States. (In 2012, for example, only 38 patents from the region were registered with the U.S. Patent and Trade Office – compared to the average of 27 patents registered by each American university.) At the same time, very little of those investments are efficiently transformed into wealth. For example, for each invention that received a patent, the region spent, on average, three times more in R&D resources than does the United States.

Building on a continuing series of efforts to reform their national innovation systems, in the hope of changing their gloomy prospects, the Western Balkan countries in 2009 committed to develop a joint regional research and innovation strategy. That strategy, developed between 2011 and 2013, was formally endorsed last month by the ministers responsible for science and education from Albania, Bosnia-Herzegovina, Croatia, Kosovo, the Former Yugoslav Republic of Macedonia, Montenegro, and Serbia. The preparation of the strategy, which benefited from technical assistance by the World Bank and from the financial support of the European Commission, involved representatives from the region’s leading universities, research institutes, private sector firms and government agencies. Discussions of the draft proposal were pursued in all seven countries as part of a large outreach exercise.

Seeking Effective Policies to Promote Financial Inclusion

Margaret Miller's picture

The 2014 Global Financial Development Report, released today by the World Bank Group, presents the most comprehensive review to date of research findings on an increasingly prominent issue in international economic policy: financial inclusion. It also highlights several key topics that are linked to the growing interest in this topic – advances in technology, product design innovations and the role of financial education in financial inclusion. 

It’s easy to understand the focus on technology in this kind of report. Mobile phones and other telecommunications and digital technologies offer potential opportunities for the cost-effective expansion of financial services into previously overlooked or under-served markets. Technology is only part of the reason, however, for increased attention to financial inclusion. There is also a new appreciation for the role of financial services in the lives of the poor – an appreciation gained through a pioneering research effort using “financial diaries” methodology. This includes an awareness that even the best supply-side responses – often powered by new technologies – need to understand the demand side of the equation to be commercially successful and to offer value to consumers.

'Project Greenback 2.0 – Remittance Champion Cities' Launched in Turin, Italy

Massimo Cirasino's picture

"Project Greenback 2.0 – Remittance Champion Cities" was launched on October 29 in Turin, Italy.

A team from the World Bank's service line on Financial Infrastructure, hosting the launch event, was thrilled to welcome a room full of migrants, market paricipants, public officials, policy researchers and private-sector observers.

Since March 2013, in partnershp with the Turin city government, the World Bank team has been preparing for the launch of Project Greenback 2.0, which aims to foster the development of a sound and efficient market for remittances. The project pursues an important new approach: It focuses on remittance senders, and its priority is meeting their needs.

In the first months of our efforts in Turin, we have been working on a survey among remittance senders, and we have been mapping and monitoring the services that are available to them when they seek to send money home. The survey focused on Romanians, Moroccans and Peruvians – the most numerous immigrant groups in Turin, who together account for more than 60 percent of the city's immigrant population.

Innovation and Insurance: Protection Against the Costs of Natural Disaster

Olivier Mahul's picture

Natural disasters – such as tsunamis, earthquakes, cyclones and floods – are costly to society, in terms of both human destruction and financial losses. Governments ultimately bear the full cost of the havoc wreaked by natural disasters, which can create an enormous strain on limited government budgets, especially in developing countries. This is even before we begin to contemplate the development impact and how the poorest of the poor are disproportionately affected.

Just last week, the world saw the widespread damage that the St. Jude storm inflicted across Europe, and we witnessed its effect on hundreds of thousands of people. Most advanced economies, however, have sufficient capacity to be able to absorb the financial losses inlicted by natural disasters. Higher-income countries enjoy (relatively) efficient public revenue systems and developed domestic insurance markets.

By contrast, developing countries do not have the same degree of access to financial and insurance markets. They face limited revenue streams, limited fiscal flexibility, and limited access to quick liquidity in the wake of an event. This is particularly so for Small Island Developing States (SIDS), such as the Pacific island nations.

La circulation de l’argent de la piraterie: une économie en circuit fermé

Stuart Yikona's picture
Also available in: English

Assis en lieu sûr, à des milliers de milles d’ici, trois anciens pirates racontent leur passé de « fantassins », leur vie embarquée et leurs préparatifs avant d’attaquer des cargos peu suspicieux et vulnérables, au large de la Corne de l’Afrique. À l’écoute de ces témoignages, l’équipe de chercheurs que nous sommes est clouée sur place.
 
Nous les écoutons nous raconter comment ils sont tombés dans le commerce de la piraterie, combien cela leur rapportait, comment ils dépensaient cet argent et aussi, ce qui nous importe peut-être le plus ici, ce qu’ils savent de leurs « capitaines », ces financeurs des pirates et autres investisseurs et négociateurs.
 
Car ces fantassins ne sont en fait que du menu fretin, des agents subalternes payés pour détourner des navires qui ne seront rendus à leurs propriétaires qu’au prix du versement d’une rançon juteuse.
 
Des rançons estimées au total à 339-413 millions de dollars entre avril 2005 et décembre 2012 selon les recherches que nous avons effectuées pour notre rapport consacré aux « voies de la piraterie maritime » (Pirate Trails) au large de la Corne de l’Afrique. La fourchette d’estimation est relativement large sachant que la réticence des compagnies de navigation à dévoiler le coût des rançons tout comme celle des pirates à révéler leur butin empêchent de chiffrer un montant exact.

O Ciclo do Dinheiro da Pirataria: 'Fluxo Econômico'

Stuart Yikona's picture

Sentados em uma casa segura, a quilômetros de distância, três antigos piratas refletem sobre suas vidas passadas como ”soldados rasos” a bordo de esquifes, preparando-se para atacar navios de carga desavisados nas costas do Chifre da África. Nossa equipe de pesquisa ficou pasma com suas histórias.
 
Ouvimos a descrição de como eles se envolveram na pirataria, quanto ganharam, como gastaram seu dinheiro e, talvez o mais interessante, o que eles sabem sobre seus "chefes", os financistas, investidores e negociadores da pirataria.
 
Esses soldados rasos eram apenas peixes pequenos em um imenso oceano.  Eram mandados para sequestrar navios, que só eram devolvidos em troca de resgates pesados.
 
De acordo com as pesquisas do nosso relatório Pirate Trails, que estuda os atos de pirataria nas costas do Chifre da África, estimamos que entre US$ 339 milhões e US$ 413 milhões foram negociados em pagamentos de resgates entre abril de 2005 e dezembro de 2012. O valor exato é muito difícil de determinar, devido à relutância das companhias de navegação e dos piratas de revelar o custo e as recompensas da pirataria.

The Piracy Money Cycle: ‘Trickle-Round Economics’

Stuart Yikona's picture
Also available in: Français

Sitting in a safe house, an ocean away, three former pirates reflect on their past lives as ”footsoldiers” aboard  skiffs preparing to attack unsuspecting cargo vessels off the Horn of Africa. Our research team is transfixed by their stories.
 
We listen as they describe to us how they got involved in the piracy business, how much they earned, how they spent their money and, perhaps most interesting, what they know about their ”masters” – the pirate financiers, investors and negotiators.
 
These footsoldiers were merely small fish in a big sea.  They would be sent out to hijack shipping vessels, which would only be returned to the ships’ owners for a hefty ransom.
 
Following research for our report   “Pirate Trails,” studying acts of piracy off the Horn of Africa, we estimate  that between US$339 million and US$413 million was handed over  in ransom payments between April 2005 and December 2012.  The exact amount is very hard to pin down, given the reluctance of the shipping companies and pirates to reveal the cost and rewards of piracy.

Islamic Finance Grabs Headlines in London and Istanbul

Abayomi Alawode's picture

Talk about timing! This week has seen back-to-back initiatives that underscore the growing importance of Islamic finance – and the significant role that the World Bank Group can play in unleashing its potential for financing international development.

This Tuesday, October 29, Prime Minister David Cameron of the United Kingdom announced that the U.K. will become the first non-Muslim country to issue a Sukuk or Islamic bond, with a £200 million issue planned for early 2014. Cameron also announced plans for a new Islamic index on the London Stock Exchange. These initiatives are all part of a grand plan by the U.K. government to turn London into a global capital of Islamic finance.

The very next day, on Wednesday, October 30, World Bank Group President Jim Kim inaugurated the World Bank Global Islamic Finance Center in Istanbul. Envisioned as a knowledge hub for developing Islamic finance globally, the center will conduct research and training as well as provide technical assistance and advisory services to World Bank Group client countries interested in developing Islamic financial institutions and markets.

A WBG-powered supply chain revolution

Yara Salem's picture

In my previous blog posts on Global Vale Chains (GVCs), I discussed the important role of lead suppliers in linking up with small and medium-size enterprises (SMEs). Since IFC is planning to work with anchor companies to influence supplier-SME relationships, I’m now looking into what type of anchor leads we should work with: those anchors whose business model is built around a Western-style, arm’s-length relationship, or those whose model and business style is based on joint trust, cooperation and support for their suppliers – using a type of keiretsu model (which seeks to enrich a relationship for mutual long-term benefits).
 
In other words: Should we work with those anchors that only check the inspection documents of suppliers’ factories, or with those who also examine the physical workplace and social well-being of their employees?
 
To achieve long-term socioeconomic benefits for all – especially to unemployed, unskilled and untrained workers – working with lead firms who embrace key elements of the keiretsu model simply makes sense in our development context. Such a model provides a much-needed upgrading for suppliers who hire such workers, offering clear benefit to them and their products by positioning them in a more relevant role in the GVC.

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