World Bank’s Country Strategy for India (2013-16)
Source: World Bank
The World Bank is holding a series of consultations to seek inputs on its proposed Country Program Strategy (CPS) for India for 2013-2016. The CPS is the Bank’s roadmap for engagement in the country over the next four years. Oriented toward results, the CPS aims to support India’s development agenda of faster, sustainable and more inclusive growth as outlined in the government’s upcoming 12th Five Year Plan.
The CPS identifies key areas where the World Bank’s assistance can have the greatest impact on poverty reduction. This, in turn, determines the level and composition of the World Bank Group’s financial, advisory, and technical support to the country over a four-year period.
The CPS is developed in consultation with country authorities, civil society organizations, development partners, the media, the private sector, and other stakeholders. Consultations provide a platform for the World Bank Group to tap into the experience and knowledge of a broad range of stakeholders, and listen to their ideas about how the Bank can work with them to help the country meet its development challenges. Discussions not only cover the country’s long-standing development agenda but also the new challenges thrown up by unprecedented economic growth, and the recent slowdown.
WB Urges Developing Countries to Strengthen Domestic Fundamentals, to Weather Global Economic Turmoil
Developing countries should prepare for a long period of volatility in the global economy by re-emphasizing medium-term development strategies, while preparing for tougher times, says the World Bank in the newly-released Global Economic Prospects (GEP), June 2012.
A resurgence of tensions in high-income Europe has eroded the gains made during the first four months of this year, which saw a rebound in economic activity in both developing and advanced countries and an easing of risk aversion among investors. Since May 1st, increased market jitters have spread. Developing and high-income country stock markets have lost some 7 percent, giving up two-thirds of the gains generated over the preceding four months. Most industrial commodity prices are down, with crude and copper prices down by 19 and 14 percent, respectively, while developing country currencies have lost value against the US dollar, as international capital fled to safe-haven assets, such as German and U.S. government bonds.
So far, conditions in most developing countries have not deteriorated as much as in the fourth quarter of 2011. Outside of Europe and Central Asia and the Middle-East and North Africa, developing country credit default swap (CDS) rates, a key indicator of market sentiment, remain well below their maximums from the fall of 2011.
Cities contribute an estimated 70 percent of the world’s energy-related greenhouse gases (GHG). Their locations, often in low-elevation coastal zones, and large populations make them particularly vulnerable to the impacts of climate change. But cities often take steps, even ahead of national governments, to reduce GHG emissions. So it is with China’s cities, which are well placed to chart a low-carbon growth path to help reach China’s national targets for reducing the energy and carbon intensity of its economy. China’s cities will need to act on multiple fronts, in some cases scaling up elements of existing good practice, in others changing established ways of doing business. Actions affecting land-use and spatial development are among the most critical to achieving low-carbon growth as carbon emissions are closely connected to urban form. Spatial development also has very strong ‘lock-in’ effects: once cities grow and define their urban form, it is almost impossible to retrofit them because the built environment is largely irreversible and very costly to modify. Furthermore, cities need energy-efficient buildings and industries. They need a transport system that offers alternatives to automobiles. They need to shift to efficient management of water, wastewater, and solid waste. And they need to incorporate responses to climate change in their planning, investment decisions, and emergency-preparedness plans.
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This paper reviews and synthesizes theoretical and empirical research on the role of finance in developing countries. First, the paper presents the stylized facts about firms in developing nations as well as the legal, financial and broader institutional framework in which these firms operate. Next, the paper focuses on the financing choices available to small and medium firms in developing countries and highlights areas needing additional research.
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Accounting for water quality in monitoring access to safe drinking-water as part of the Millennium Development Goals: lessons from five countries
ObjectiveTo determine how data on water source quality affect assessments of progress towards the 2015 Millennium Development Goal (MDG) target on access to safe drinking-water.MethodsData from five countries on whether drinking-water sources complied with World Health Organization water quality guidelines on contamination with thermotolerant coliform bacteria, arsenic, fluoride and nitrates in 2004 and 2005 were obtained from the Rapid Assessment of Drinking-Water Quality project. These data were used to adjust estimates of the proportion of the population with access to safe drinking-water at the MDG baseline in 1990 and in 2008 made by the Joint Monitoring Programme for Water Supply and Sanitation, which classified all improved sources as safe.FindingsTaking account of data on water source quality resulted in substantially lower estimates of the percentage of the population with access to safe drinking-water in 2008 in four of the five study countries: the absolute reduction was 11% in Ethiopia, 16% in Nicaragua, 15% in Nigeria and 7% in Tajikistan. There was only a slight reduction in Jordan. Microbial contamination was more common than chemical contamination.ConclusionThe criterion used by the MDG indicator to determine whether a water source is safe can lead to substantial overestimates of the population with access to safe drinking-water and, consequently, also overestimates the progress made towards the 2015 MDG target. Monitoring drinking-water supplies by recording both access to water sources and their safety would be a substantial improvement.
Key Findings+ The African market remains highly fragmented; preventing enormous opportunities for cross-border trade from being exploited and in turn generating new jobs.+ Effective regional integration is more than simply removing tariffs—it is about addressing the barriers that undermine the daily operations of ordinary producers and traders of both goods and services.+ The incidence of barriers to regional trade fall most heavily, and disproportionately, on the poor and on women, and is preventing them from earning a living in activities where they have a comparative advantage—catering for smaller, local markets across the border.+ Action is required at both the supra-national and national levels. Regional communities can provide the framework for reform but responsibility for implementation lies with each member country.+ The donor community can help countries understand the political economy resistance that lies behind the fact that despite public pledges for integration, actual barriers to trade remain in place.
Job Trends: Slow and Steady Recovery Continues, With Encouraging Signs in Developing Countries in Eastern Europe
+ Overall, the employment picture in middle-income countries continued a gradual recovery.+ Signs of a strong resurgence were seen in Eastern Europe and Central Asia.+ Latin America’s rebound appeared to be moderating, while trends in East Asia were positive.
The report documents the impressive achievements of the European growth model over the last 50 years. Accounting for the stresses it is experiencing and assessing the longer-term challenges that Europe will face, the report then evaluates the six principal components of the model: Trade, Finance, Enterprise, Innovation, Labor, and Government. It finds that the European growth model has been a powerful engine for economic convergence, helping developing countries in Europe catch up to their richer neighbors and become high-income economies. But recent changes in and outside Europe necessitate change. The report proposes the adjustments needed to make trade and finance work even better, to encourage enterprise and innovation in parts of Europe which have begun to lag, and address shortcomings in the functioning of labor markets and governments. The changes proposed would restart the European convergence machine, make Europe’s enterprises competitive, and help Europeans afford the highest standards of living in the world.
Source: World Bank
Developing countries should prepare for further downside risks, as Euro Area debt problems and weakening growth in several big emerging economies are dimming global growth prospects, says the World Bank in the newly-released Global Economic Prospects (GEP) 2012.The Bank has lowered its growth forecast for 2012 to 5.4 percent for developing countries and 1.4 percent for high-income countries (-0.3 percent for the Euro Area), down from its June estimates of 6.2 and 2.7 percent (1.8 percent for the Euro Area), respectively. Global growth is now projected at 2.5 and 3.1 percent for 2012 and 2013, respectively.Slower growth is already visible in weakening global trade and commodity prices. Global exports of goods and services expanded an estimated 6.6 percent in 2011 (down from 12.4 percent in 2010), and are projected to rise by only 4.7 percent in 2012. Meanwhile, global prices of energy, metals and minerals, and agricultural products are down 10, 25 and 19 percent respectively since peaks in early 2011. Declining commodity prices have contributed to an easing of headline inflation in most developing countries. Although international food prices eased in recent months, down 14 percent from their peak in February 2011, food security for the poorest, including in the Horn of Africa, remains a central concern.
As 2011 comes to a close, the global economy is facing yet another economic slowdown. Based on household survey data from 2010 and labor market indicators through the third quarter of 2011, the World Bank draws key lessons from the impact of the Great Recession of 2008/2009 and the quick recovery on Latin America and the Caribbean’s poor and explores their implications for poverty reduction in the region going forward.
According to the new brief, On the Edge of Uncertainty: Poverty Reduction in Latin America and the Caribbean during the Great Recession and Beyond, even during the recession Latin America managed to reduce poverty levels. Then, as it quickly rebounded in 2010, poverty dropped even faster — by 12.6 million — and continued to decline throughout 2011. Today, we can safely say that moderate poverty in Latin America has dropped by 73 million since 2003.
- Officially recorded remittance flows to developing countries are estimated to have reached $351 billion in 2011, up 8 percent over 2010.
- For the first time since the global financial crisis, remittance flows to all six developing regions rose in 2011. Growth of remittances in 2011 exceeded our earlier expectations in four regions, especially in Europe and Central Asia (due to higher outward flows from Russia that benefited from high oil prices) and Sub-Saharan Africa (due to strong south-south flows and weaker currencies in some countries that attracted larger remittances). By contrast, growth in remittance flows to Latin America and Caribbean was lower than previously expected, due to continuing weakness in the U.S. economy and Spain. Flows to Middle East and Africa were also impacted by the “Arab Spring”.
- Following this rebound in 2011, the growth of remittance flows to developing countries is expected to continue at a rate of 7-8 percent annually to reach $441 billion by 2014. Worldwide remittance flows, including those to high-income countries, are expected to exceed $590 billion by 2014.
- However, there are serious downside risks to this outlook. Persistent unemployment in Europe and the U.S. is affecting employment prospects of existing migrants and hardening political attitudes toward new immigration. Volatile exchange rates and uncertainty about the direction of oil prices also present further risks to the outlook for remittances.
- Remittance costs have fallen steadily from 8.8 percent in 2008 to 7.3 percent in the third quarter of 2011. However, remittance costs continue to remain high, especially in Africa and in small nations where remittances provide a life line to the poor.
- There is a pressing need to improve data on remittances at the national and bilateral corridor level. This would make it possible to more accurately monitor progress towards the ‘5 by 5’ remittance cost reduction objective.
- Brazil and Sub-Saharan Africa are re-establishing a robust engagement, after over 200 years. The two regions are natural partners with strong historic and cultural links and similar geological and climatic conditions. Because of these shared conditions, Brazilian technology is easily adapted to Africa.
- Brazil has emerged as one of the world’s strongest economies and is playing an important role in redefining “the global south” in the changing world architecture. Africa is rapidly changing and Brazil has expressed growing interest in supporting and taking part in its development.
- Brazil’s economic growth, its success in narrowing social inequality and its development experience offer lessons for African countries.
- Countries in Sub-Saharan Africa have requested cooperation from Brazil in five key areas: tropical agriculture, tropical medicine, vocational training, energy and social protection.
- Brazil’s trade with Sub-Saharan Africa increased between 2000 and 2010 from U$2 billion to U$12 billion; with expectations of continuous growth in the coming years. There are some obstacles that are being addressed like ease of transport (air and maritime) and telecommunications.
- South-South partnering will play a major role in global knowledge, trade and investments in the coming years.
- The World Bank can play a key role in supporting ongoing partnerships between Sub-Saharan Africa and Brazil and South-south relations as a whole.
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A joint World Bank-IMF report released today shows significant progress in reducing the debt burdens of some of the world’s poorest countries.
The report, Heavily Indebted Poor Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI) –Status of Implementation and Proposals for the Future of the HIPC Initiative, shows that 36 out of 40 HIPCs have reached the debt relief decision point, the stage in which they qualify for debt relief, and 32 of them have reached the completion point, where debt is irrevocably cancelled, and also benefited from debt relief under the MDRI.
The report, which was discussed by Board of Executive Directors of the World Bank and the Board of the IMF last week, notes that debt relief under the initiatives to the 36 post-decision point countries represents almost 35 percent of their 2010 GDP. Together with debt relief under traditional mechanisms and additional relief from Paris Club creditors, this assistance is estimated to reduce the debt burden for these countries by about 90 percent relative to pre-decision point levels. In addition, poverty reducing spending increased by more than three percentage points of GDP, on average, between 2001 and 2010, while debt service payments declined.
Nevertheless, some challenges remain. Progress toward the Millennium Development Goals (MDGs) has been uneven — only a quarter of completion point HIPC countries are on track to meeting the MDG1 to eradicate extreme poverty and hunger. Other challenges include providing debt relief to countries that are still at the pre-decision point stage, encouraging full participation of all creditors, ensuring the full financing of both HIPC and the MDRI, and addressing the issue of commercial creditor litigation.
East Asia and Pacific Economic Update – Navigating Turbulence, Sustaining Growth
Source: World Bank
From press release:
Growth is still strong in developing East Asia, but continues to moderate mainly due to weakening external demand, underscoring the need for governments to refocus on reforms to increase domestic demand and productivity, says the World Bank in its latest East Asia and Pacific Economic Update released today.
The report, issued biannually, projects that amid uncertainties in Europe and a global growth slowdown, real GDP in developing East Asia will increase by 8.2 percent in 2011 (4.7 percent excluding China) and by 7.8 percent in 2012. Domestic demand in middle-income countries was the largest contributor to growth in the region, although it is easing driven by the normalization of fiscal and monetary policy.