Financial constraints are widespread in developing countries, where even short-term credit is limited. Finance held by firms as working capital is a substantial proportion of sales revenue, yet the role of working capital is largely neglected by existing models of financial constraints.
... Voir la suite This paper presents a dynamic model of the firm that incorporates working capital by introducing a delay between factor payments and the receipt of revenue. In contrast with previous models, the working capital model predicts that firms under binding constraints will substitute between labor and capital in response to demand shocks, causing investment to be countercyclical. For firms near the margin of being constrained, constraints bind when positive production opportunities arise. Output growth is therefore constrained in response to positive shocks but not to negative shocks. Simulations suggest that models without working capital may understate the predicted effects of financial constraints on production efficiency, firm profit and growth over time. The predictions are tested with the Bangladesh Panel Survey data for manufacturing firms. Consistent with the theory, there is evidence that constraints bind when output price increases, that investment by constrained firms is countercyclical, and that output response to positive shocks is dampened for firms that are sometimes constrained. The results also are important for policy. In order to maximize growth, efforts to relieve credit constraints should be focused on periods when demand shocks are high.
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Document de travail de recherche sur les politiques WPS6797 MAR 01, 2014
This paper reviews the published work on the governance of regulatory authorities in order to identify the basic governance standards that apply and some of the factors that affect the implementation of good governance.
... Voir la suite There are four pillars of good regulatory governance: independence, accountability, transparency, and integrity. The regulator should be operationally independent from commercial and political influences in the exercise of its functions and powers. Accountability is the means whereby a regulatory authority is held responsible for the actions it takes. Transparency refers to the publication of relevant information designed to demonstrate consistency and openness. The fourth governance pillar, integrity, refers to the internal processes that the authority adopts to ensure there is discipline and consistency in its operations and to limit the risks of regulatory staff acting in their own self-interest as opposed to that of the authority and the market. These four elements are mutually reinforcing, in that accountability is necessary to provide legitimacy to independence, transparency is necessary to demonstrate that independence does not lead to abuse or improper behavior, and integrity is necessary to provide the discipline to control the exercise of independent powers. Available evidence suggests that independence and accountability are far from being universally applied in practice. The paper concludes with some practical suggestions that experience indicates are likely to enhance the effectiveness of the governance of securities regulators. Good governance of the securities regulator is necessary for effective regulation. It is also of importance in setting an example to encourage good corporate governance in the private sector.
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Document de travail de recherche sur les politiques WPS6800 MAR 01, 2014
The development objective of the Participatory Irrigation Development Project for Philippines is to improve irrigation service delivery on a financially and technically sustainable basis that will contribute to increased agricultural production and productivity among beneficiary farmers in irrigated areas.
... Voir la suite This restructuring seeks to cancel a loan covenant (reference schedule 2, section I.A, paragraph 6) which refers to the engagement of reputable audit consultants to assist in strengthening the internal control systems of the National Irrigation Administration (NIA), including its internal audit unit. To comply with the covenant, NIA commits to continue the strengthening of its internal audit service (IAS) and participate continuously in internal audit activities such as those supported by the Department of Budget and Management (DBM) and the Commission on Audit (COA).
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The cost of the subsidy system in Morocco peaked at 6.6 percent of gross domestic product (GDP) in 2012, an amount larger than the country's total investment budget for that year.
... Voir la suite Direct subsidies to households in 2013 (October 2013 prices) are estimated at DH34.4 billion (US$4.1 billion, or 3.9 percent of GDP). Replacing direct subsidies with a universal per capita annual cash transfer of DH749 (US$90) would leave the poverty rate unchanged, while reducing direct subsidies to DH24.6 billion (2.8 percent of GDP). It is possible to reduce direct subsidies further by targeting only a part of the population, down to DH2.4 billion (0.3 percent of GDP), if only the poor were targeted. However, to implement selective targeting, the government of Morocco will need to substantially strengthen its social protection system.
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This paper investigates the factors associated with foreign direct investment "surges" and "stops," defined as sharp increases and decreases, respectively, of gross foreign direct investment inflows to the developing world and differentiated based on whether these events are led by waves in greenfield investments or mergers and acquisitions.
... Voir la suite Greenfield-led surges and stops occur more frequently than mergers and acquisitions-led ones and different factors are associated with the onset of the two types of events. Global liquidity is the only factor significantly associated with a surge, regardless of its kind, while decline in global economic growth and a surge in the preceding year are the only predictors of a stop. Greenfield-led surges and stops are more likely in low-income and resource-rich countries than elsewhere. Global growth, financial openness, and domestic economic and financial instability enable mergers and acquisitions-led surges. These results differ from those in the literature on surges and stops and are particularly relevant in countries where foreign direct investments dominate capital flows.
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Document de travail de recherche sur les politiques WPS6771 FEB 01, 2014
This paper introduces a new data set on the stock and structure of domestic debt in 36 low-income countries over the period 1971-2011. It characterizes the recent trends regarding the do-mestic public debt of low-income countries and explores the relevance of different arguments put forward on the benefits and costs of government borrowing in local public debt markets.
... Voir la suite The main stylized fact emerging from the data is the increase in domestic government debt since 1996. It is also observed that poor countries have been able to increase the share of long-term in-struments over time and that maturity lengthening went together with a decrease in borrowing costs. However, the concentration of the investor base, mainly dominated by commercial banks and the central bank, may crowd out lending to the private sector.
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Document de travail de recherche sur les politiques WPS6777 FEB 01, 2014
Bua, Giovanna; Pradelli, Juan; Presbitero, Andrea F.
Sovereign wealth funds represent a large and growing pool of savings. An increasing number of these funds are owned by natural resourceexporting countries and have a variety of objectives, including intergenerational equity and macroeconomic stabilization.
... Voir la suite Traditionally, these funds have invested in external assets, especially securities traded in major markets. But the persistent infrastructure financing gap in developing countries has motivated some governments to encourage their sovereign wealth funds to invest domestically. This paper proposes some basic elements of a conceptual framework to create a system of checks and balances to help ensure that the sovereign wealth funds do not undermine macroeconomic management or become a vehicle for politically driven "investments." First, the risks and opportunities of domestic investment by sovereign wealth funds are analyzed. Central issues are the relationship of sovereign wealth fund financing to the budget process and to the procurement systems of sector ministries, as well as the establishment of appropriate benchmarks and safeguards to ensure the integrity of investment decisions. The paper argues that a well-governed sovereign wealth fund, with a sound mandate and professional management and staffing, can possibly improve the quality of the public investment program. But its mandate should not duplicate that of other government institutions with investment mandates, such as the budget, the national development bank, the investment authority, and state-owned enterprises. Establishing rules on the type of investment (for example, commercial and/or quasi-commercial) and its modalities (for example, no controlling stakes, leveraging private investment) is one way to ensure separation between the activities of the sovereign wealth fund and those of other institutions. The critical issue remains that of limiting the sovereign wealth fund's investment scope to that appropriate for a wealth fund. If investments that generate quasi-market returns are permitted, the size of the home bias should be clearly stipulated and these investments should be reported separately.
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Document de travail de recherche sur les politiques WPS6776 FEB 01, 2014
The link between infrastructure and economic growth is widely acknowledged -- as is the infrastructure gap, which can act as a break on growth in emerging markets and developing economies (EMDEs).
... Voir la suite Since the global economic and financial crisis, the challenges of raising financing for infrastructure projects in EMDEs are also well known. The challenges come from stretched government finances and restrictions on global bank lending. Hence much attention has been focused on the potential for institutional investors as a growing potential source of financing. This paper argues that infrastructure projects can potentially deliver long-term returns, but investments, particularly in EMDEs need to be carefully structured to meet the needs of both sides. The paper first considers the existing types of institutional investors and their potential for filling the infrastructure financing gap. The challenges of adjusting asset allocations, particularly toward EMDE infrastructure, are discussed and examples of projects where institutional investors have been involved are given. Finally, the paper considers a range of models for the involvement of institutional investors in EMDEs and makes initial proposals for how to determine which model fits best in a particular country context.
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Document de travail de recherche sur les politiques WPS6780 FEB 01, 2014
This paper estimates the effect of government investment on private investment in a sample of 39 low-income countries. Fluctuations in a predetermined component of disbursements on loans from official creditors to developing country governments are used as an instrument for fluctuations in public investment.
... Voir la suite The analysis finds evidence of "crowding in": an extra dollar of government investment raises private investment by roughly two dollars, and output by 1.5 dollars. To understand the implications for the return to public investment, a CES production function with public and private capital as inputs is calibrated. For most countries in the sample, the returns to government investment exceed the world interest rate. However, for some countries that already have high government investment rates, the return to further investment is below the world interest rate.
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Document de travail de recherche sur les politiques WPS6781 FEB 01, 2014
The extent to which developing countries benefit from foreign direct investment (FDI) depends on whether they are able to realize the productivity-enhancing benefits of knowledge and technology spillovers from foreign investors.
... Voir la suite To date, the experiences in Sub-Saharan Africa have been largely disappointing. This is perhaps not surprising, bearing in mind the complex interplay of factors needed for spillovers to emerge. On top of the challenges of supply side capacity and the host country's policy environment, the willingness and capacity of foreign investors to support spillovers vary hugely across sectors and firms, and are shaped by the dynamics of the global value chains (GVCs) in which they operate. This note summarizes the main findings from the new World Bank book Making Foreign Direct Investment Work for Sub-Saharan Africa and discusses the implications for policy makers hoping to harness the potential of FDI for better development outcomes.
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This roadmap for environmental and natural resources law enforcement (ENRLE) sets forth a course of action for the World Bank's ENRLE community of practice for FY2013-15.
... Voir la suite It outlines for senior management a strategy to mobilize and strengthen the Bank's engagement in the fight against environmental and natural resource crime. The roadmap also serves as a mobilizing tool for staff and management in regional departments to demonstrate the importance of ENRLE and to outline the menu of solutions that the community of practice (COP) can offer to strengthen clients' fight against environmental and natural resource crime. Recent spikes in poaching, in illegal logging, and in illegal, unreported, and unregulated (IUU) fishing have amplified the already urgent need for action. These crimes increase poverty, shrink prosperity, and magnify social and political tensions that undermine healthy communities and strong economies. Investment returns in wise environmental and natural resource law enforcement can be high. Criminal activities that affect the environment and natural resources are on the increase and pose an increasingly serious threat to development. Environmental and natural resource crime is common, but in many countries it is rarely prosecuted. This report discusses how the World Bank Group (WBG) will mobilize to work better on ENRLE. Recognizing the evolving global context, a new and fully mobilized community of practice will put more emphasis on building a constituency within the WBG to work on the range of ENRLE issues, on building the capacity of WBG staff to provide investment and technical assistance on ENRLE, on strengthening analytical work to develop a pipeline of ENRLE investments, and on fostering demand among clients for Bank investment in ENRLE.
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Document de travail (série numérotée) 84396 FEB 01, 2014
This study intends to increase understanding of how different types of mobile money services have developed in different environments. For this purpose, two countries were selected, the Republic of Korea and Uganda.
... Voir la suite From these study cases, some conclusions emerge. The development of mobile banking services can appear at different stages of financial sector development, but it requires a vibrant and competitive telecommunications sector. The regulatory environment does not need to be very sophisticated for the mobile industry to emerge. However, some elements appear to be important. The legal framework should allow (or at least not explicitly forbid) nonbank financial institutions to issue money and use banking agents or correspondents. To ensure wider use of the service by the population, it is important to educate the population on the benefits of mobile money services.
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Document de travail de recherche sur les politiques WPS6786 FEB 01, 2014