The Joint Ministerial Committee of the Boards of Governors of the World Bank and the International Monetary Fund on the Transfer of Real Resources to Developing Countries, the Development Committee, held its eighty-ninth meeting on April 12, 2014, in the Preston Auditorium of the World Bank in Washington, DC.
... Voir la suite The meeting consisted of a single session, preceded by an informal Ministerial-level lunch for Members only on the same day. Members circulated their written statements in advance and these are part of this document. Also included is a note by the International Monetary Fund Managing Director distributed ahead of the meeting. The meeting started at 3:15 p.m. with opening statements by Dr. Kim, President of the World Bank Group, and Ms. Christine Lagarde, Managing Director, International Monetary Fund, and ended at 5:30 p.m. It was chaired by Mr. Marek Belka, President, National Bank of Poland. The Agenda (Annex A) was adopted at the beginning of the meeting, followed by a discussion of the agenda topic: a paper entitled 'growth in the post-crisis global economy: policy challenges for developing countries'. In addition to the above discussion topic, a paper entitled 'progress report on mainstreaming disaster risk management in World Bank Group Operations' was submitted to the Committee as a background report. Ministers commented on these documents in their written statements to the Development Committee. The Communique (Annex B) was adopted at the end of the meeting and records the salient points and outcome of the Ministerial discussion.
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Restrictions on economic activity in area C of the West Bank have been particularly detrimental to the Palestinian economy. Area C constitutes about 61 percent of the West Bank territory.
... Voir la suite Area C is richly endowed with natural resources and it is contiguous, whereas areas A and B are smaller territorial islands. Mobilizing the area C potential will help a faltering Palestinian economy. Since area C is where the majority of the West Bank's natural resources laid, the impact of these restrictions on the Palestinian economy has been considerable. Thus, the key to Palestinian prosperity continues to lie in the removal of these restrictions with due regard for Israel's security. This report shows that rolling back the restrictions will bring substantial benefits to the Palestinian economy and can usher in a new period of increasing Palestinian gross domestic product (GDP) and substantially improve prospects for sustained growth. This report examines the economic benefits of lifting the restrictions on movement and access as well as other administrative obstacles to Palestinian investment and economic activity in area C. It focuses on the economic potential of area C and does not prejudge the status of any territory which may be subject to negotiations between Palestinians and Israelis. The authors examine potential direct, sector-specific benefits, but also indirect benefits related to improvements in physical and institutional infrastructure, as well as spillover effects to other sectors of the Palestinian economy. Realizing the full potential of such investments requires other changes as well - first, the rolling back of the movement and access restrictions in force outside area C, which prevent the easy export of Palestinian products and inhibit tourists and investors from accessing area C; and second, further reforms by the Palestinian authority to better enable potential investors to register businesses, enforce contracts, and acquire finance.
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Publication 89370 JUL 02, 2014
Niksic, Orhan; Eddin, Nur Nasser; Cali Massimiliano
This paper shows how Dutch disease effects may arise solely from a shift in demand following a natural resource discovery. The natural resource wealth increases the demand for non-tradable luxury services due to non-homothetic preferences.
... Voir la suite Labor that could be used to develop other non-resource tradable sectors is pulled into these service sectors. As a result, manufactures and other tradable goods are more likely to be imported, and learning and productivity improvements accrue to the foreign exporters. However, once the natural resources diminish, there is less income to purchase the services and non-resource tradable goods. Thus, the temporary gain in purchasing power translates into long-term stagnation. As opposed to conventional models where income distribution has no effect on economic outcomes, an unequal distribution of the rents from resource wealth further intensifies the Dutch disease dynamics within this framework.
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Document de travail de recherche sur les politiques WPS6966 JUL 01, 2014
As Brazil and China have become two of the largest global economies, they have also become increasingly connected. Three decades of fast-paced growth and structural change have turned China into the worlds second-largest economy and have transformed it into an upper-middle income country.
... Voir la suite Brazil, which had experienced its own episode of high growth between 1965 and 1974, has also become one of the largest economies. Over the last decade, Brazil and China have developed increasingly close linkages, which has come as no surprise given the scale of their economies, the complementary structure of resource endowments as well as the differences between the two countries in the structure of production and demand. This report examines how structural change in China is expected to present new opportunities and challenges for Brazil to enhance its global position and energize growth. Building on recent work (World Bank and Development Research Center, 2013), this report identifies three potential longer-term transformations of the Chinese economy structurally slower growth, a rebalancing on the demand and supply side, and a move up the value chain and examines their implications for Brazil. The report shows how the slowdown and rebalancing of China may also present new opportunities for Brazil, even if Chinas progression up the value chain is likely to present also new challenges. It lays out how Brazil could generate greater benefits from its interactions with China and how the changes in China would offer a new window of opportunity for Brazil to press ahead with its structural reform agenda. Overall, Brazil could gain tremendously from the anticipated structural changes in China, even though realizing these gains will require a proactive policy stance to enhance external ties and address internal growth and productivity constraints.
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As Brazil and China have become two of the largest global economies, they have also become increasingly connected. Three decades of fast-paced growth and structural change have turned China into the worlds second-largest economy and have transformed it into an upper-middle income country.
... Voir la suite Brazil, which had experienced its own episode of high growth between 1965 and 1974, has also become one of the largest economies. Over the last decade, Brazil and China have developed increasingly close linkages, which has come as no surprise given the scale of their economies, the complementary structure of resource endowments as well as the differences between the two countries in the structure of production and demand. This report examines how structural change in China is expected to present new opportunities and challenges for Brazil to enhance its global position and energize growth. Building on recent work (World Bank and Development Research Center, 2013), this report identifies three potential longer-term transformations of the Chinese economy structurally slower growth, a rebalancing on the demand and supply side, and a move up the value chain and examines their implications for Brazil. The report shows how the slowdown and rebalancing of China may also present new opportunities for Brazil, even if Chinas progression up the value chain is likely to present also new challenges. It lays out how Brazil could generate greater benefits from its interactions with China and how the changes in China would offer a new window of opportunity for Brazil to press ahead with its structural reform agenda. Overall, Brazil could gain tremendously from the anticipated structural changes in China, even though realizing these gains will require a proactive policy stance to enhance external ties and address internal growth and productivity constraints.
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Global growth is projected to pick up to 3.4 percent in 2015 and 3.5 percent in 2016, propelled by highincome countries. Developing country growth will benefit from these tailwinds, with growth projected to increase from 4.8 percent in 2014 to 5.5 percent in 2016broadly in line with potential.
... Voir la suite Global growth projections for 2014, however, have been marked down from 3.2 percent to 2.8 percent on account of the bumpy start this year, buffeted by poor weather in the United States, financial market turbulence and the conflict in Ukraine. The outlook for the East Asia and the Pacific region continues to reflect several counterbalancing factors, including domestic policy adjustment, volatile financing conditions, political crisis in Thailand, and sustained recovery in global demand for exports. Regional GDP growth is expected to slow down slightly to 7.0 percent by 2016, about 2 percentage points slower than the pre-crisis boom years but broadly in line with potential. Regional risks include volatility and eventual tightening of global financing conditions, possible setbacks in Chinas restructuring and a weaker contribution from net exports than assumed in the baseline. Potential escalation of regional political tensions presents additional risk to the outlook.
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Ponzis are among the most ubiquitous and least understood phenomena of economic life. They acquired a certain salience with the global financial crisis of 2008 and the crash of Bernie Madoffs celebrated Ponzi scheme.
... Voir la suite This paper explains the structure of Ponzi schemes and goes on to argue that what makes this such a troubling phenomenon is its ability to be camouflaged amidst legitimate practices. It is shown, for instance, that the common practice of giving stock options to employees could be a potential Ponzi that allows corporations to flourish for a while by borrowing from its own future. The paper goes on to discuss the need for intelligent regulation to incise harmful Ponzis (not all Ponzis are harmful) while taking care not to damage other legitimate activities that surround them.
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Document de travail de recherche sur les politiques WPS6967 JUL 01, 2014
Power sector subsidies in Sub-Saharan Africa are substantial and highly regressive. While subsidies can be quick, easy, and politically expedient to implement, they are equally quick to take root and challenging to remove.
... Voir la suite Optimal policies that are technically sound and welfare-enhancing over the long run have nevertheless been found difficult to launch and even more challenging to sustain. Of the barriers to reform, those associated with political economy are among the most powerful, yet their analysis is often lacking due consideration in the reform design process. This paper reviews the literature on power subsidies and their reform with emphasis on the political economy of such reform. It examines pricing principles in the power sector and different types of subsides; drivers for subsidies, benefits and costs of subsidy reform, and their distribution; and approaches to political economy analysis, tools available, and methodological issues. The paper draws examples from Sub-Saharan Africa and elsewhere, and presents case studies from the literature.
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The paper provides a detailed review of Thomas Piketty's book "Capital in the 21st century." It focuses on the new contributions of the book, and in particular on its unified treatment of economic growth, functional income distribution, and concentration of personal income.
... Voir la suite It concludes that Piketty's reinvigoration of classical and empircally-drven approach is likely to have a profound impact on economics.
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Document de travail de recherche sur les politiques WPS6974 JUL 01, 2014
This paper examines the theory of Dutch disease and its implications for practical policy questions. Dutch disease is a term that is well-known to economists and development practitioners.
... Voir la suite But it is also a concept that is often conflated with "resource curse" and misinterpreted as a "disease" that necessarily causes adverse impacts on the economy. The paper points out that many of the seemingly well-established arguments in this field are not necessarily grounded in theory or empirical evidence. Great care is needed in diagnosing Dutch disease and formulating policy prescriptions based on the theoretical framework, given the restrictive assumptions that may not be fully applicable and the limited relevance to todays inextricably intertwined trade flows. Countries facing large inflows of foreign currency should focus on safeguarding the domestic economy from the volatility of international commodity and capital markets, and building robust institutions to reduce adjustment costs and boost broader competitiveness. A policy package needs to be comprehensive, covering macroeconomic and structural policy measures, and should be calibrated to target country specific concerns. Policies may need to be adjusted continuously in view of the evolving dynamics of the global and domestic economic environment.
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Document de travail de recherche sur les politiques WPS6981 JUL 01, 2014
This paper introduces a new data set and establishes a set of basic facts and patterns regarding the trade that countries fight about under World Trade Organization (WTO) dispute settlement.
... Voir la suite The paper characterizes the scope of products, as well as the levels of and changes to the trade values, market shares, volumes, and prices for those goods that eventually become subject to WTO litigation. The first result is striking heterogeneity in the level of market access at stake across disputes: for example, 14 percent of cases over disputed import products feature bilateral trade that is less than $1 million per year and another 15 percent feature bilateral trade that is more than $1 billion per year. Nevertheless, some strong patterns emerge from a more detailed examination of the data. Both high- and low-income complainants tend to suffer important losses in foreign market access in the products that ultimately become subject to dispute. Furthermore, although the respondent's imposition of an allegedly WTO-inconsistent policy is associated with reductions, on average, in trade values, volumes, and exporter-received prices, there is some evidence of differences in the size of these changes across the different types of policies under dispute and the potential exporter country litigants. Finally, these different types of policies under dispute can have dissimilar trade effects for the complainant relative to other (non-complainant) exporters of the disputed product and this is likely to affect the litigation allegiance of third countries.
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Document de travail de recherche sur les politiques WPS6979 JUL 01, 2014
This paper develops a dynamic stochastic general equilibrium model to analyze and derive simple budget rules in the face of volatile public revenue from natural resources in a low-income country like Niger.
... Voir la suite The simulation results suggest three policy lessons or rules of thumb. When a resource price change is positive and temporary, the best strategy is to save the revenue windfall in a sovereign fund, and use the interest income from the fund to raise citizens' consumption over time. This strategy is preferred to investing in public capital domestically, even when private investment benefits from an enhanced public capital stock. Domestic investment raises the prices of domestic goods, leaving less money for government to transfer to households; public investment is not 100 percent effective in raising output. In the presence of a negative temporary resource price change, however, the best strategy is to cut public investment. This strategy dominates other methods, such as trimming government transfers to households, which reduces consumption directly, or borrowing, which incurs an interest premium as debt rises. In the presence of persistent (positive and negative) shocks, the best strategy is a mix of public investment and saving abroad in a balanced regime that provides a natural insurance against both types of price shocks. The combination of interest income from the sovereign fund, transfers to households, and output growth brought about by public investment provides the best protective mechanism to smooth consumption over time in response to changing resource prices.
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Document de travail de recherche sur les politiques WPS6984 JUL 01, 2014
Informal trade supports the livelihood of hundreds of thousands of households in Africa, reaches markets and clients that are underserved by formal channels, and contributes to regional food security.
... Voir la suite Despite numerous benefits, conducting cross-border transactions remains expensive for small traders in Africa. For example, small traders in Malawi and Zambia pay 62 percent more in per unit terms for border costs than large formal traders. While there are systems in place to facilitate cross-border trade such as the current Simplified Trade Regime (STR) that eases certain customs processes, a host of registration and other requirements remain in place and increase small traders' costs to uncompetitive levels. This note presents an overview of key challenges faced by small traders across Africa, and proposes the charter for cross-border traders as a potential solution to address them. Special attention is given to the case of Malawi and Zambia, where the Charter is currently being piloted by the World Bank in collaboration with the respective Governments, Traders' Associations, and border officials as part of the first joint policy action emerging from the Diagnostics Trade Integration Studies (DTIS) carried out in the two countries.
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Mobile phone coverage has expanded considerably throughout the developing world, particularly within sub-Saharan Africa. Existing evidence suggests that increased access to information technology has improved agricultural market efficiency for consumer markets and certain commodities, but there is less evidence of its impact on producer markets.
... Voir la suite Building on the work of Aker (2010), this paper estimates the impact of mobile phone coverage on producer price dispersion for three commodities in Niger. The results suggest that mobile phone coverage reduces spatial producer price dispersion by 6 percent for cowpea, a semi-perishable commodity. These effects are strongest for remote markets and during certain periods of the year. The introduction of mobile phone coverage has no effect on producer price dispersion for millet and sorghum, two staple grains that are less perishable and are commonly stored by farmers. There are no impacts of mobile phone coverage on traders' gross margins or producer price levels, but mobile phone coverage is associated with a reduction in the intra-annual price variation for cowpea. These results are potentially explained by the fact that farmers engage in greater storage for storable commodities such as millet and sorghum.
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Document de travail de recherche sur les politiques WPS6986 JUL 01, 2014
Deeper regional integration can be beneficial especially for regions along international borders. It can open up new markets on opposite sides of borders and give consumers wider access to cheaper goods.
... Voir la suite This paper uses data from five contiguous districts of India, Nepal, and Bangladesh in the northeast of the subcontinent to measure the degrees of trade complementarity between districts. The paper illustrates that the regions are underexploiting the potential of intraregional commerce. Price wedges of up to 90 percent in some important consumption products along with measures of complementarity between households' production and consumption suggest the potential for relatively large gains from deeper trade integration. Furthermore, an examination of a specific supply chain of tea highlights factors that help industries scale up, aided by institutions such as an organized auction and decent physical and legal infrastructure. However, districts alike in geography but located across international boundaries face different development prospects, suggesting that gains from reduced "thickness of borders" would not accrue automatically. Much rests on developing intrinsic industry competitiveness at home, including the reform of regulatory and business practices and infrastructural bottlenecks that prevent agglomeration of local economies.
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Document de travail de recherche sur les politiques WPS6987 JUL 01, 2014
This paper seeks to find empirical evidence of a link between tax simplification and corruption in tax administration. It attempts to do this by first defining "tax simplicity" as a measurable variable and exploring empirical relationships between simpler tax regimes and corruption in tax administration.
... Voir la suite Corruption in tax administration is calculated with data series from the World Bank's Enterprise Survey Database. The focus is on business taxes. The study includes 104 countries from different income groups and regions of the world. The time period is 2002-12. The empirical findings support the existence of a significant link between the measure of tax corruption and tax simplicity, so a less complex tax system is shown to be associated with lower corruption in tax administration. It is predicted that the combined effect of a 10 percent reduction in both the number of payments and the time to comply with tax requirements can lower tax corruption by 9.64 percent. Some interesting regional differences are observed in the results. Similarly, the income level of countries plays an important role in determining the impact of tax simplification on tax corruption; specifically, the link is stronger for lower-income level countries. The positive link between tax simplicity and lower tax corruption has useful policy implications.
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Document de travail de recherche sur les politiques WPS6988 JUL 01, 2014