PSD Blog - The World Bank Group

Do it yourself – infrastructure in India

Dismayed by the state of affairs, India's private sector takes matters in its own hands. Result: a record $500 billion investment in infrastructure projects will take place over the next three years.

Sounds expensive? K.V. Kamath, chief executive of ICICI Bank, explains that with an average profitability of 25 percent over the last years, many corporations will be able to fund almost 70 percent of projects with internal cash.

Old idea, new math

Forget about trade liberalization says Lant Pritchett suggesting a far more beneficial trade off:

If rich countries were to permit a mere 3 percent increase in the size of their labor force by easing restrictions on labor mobility, the benefits to citizens of poor countries would be $305 billion a year—almost twice the combined annual benefits of full trade liberalization ($86 billion); foreign aid ($70 billion) and debt relief (about $3 billion in annual debt service savings).

Some say there's nothing more permanent than temporary workers. How will this belief square with the growing need for a young, tax-paying labor force?

To all gregarious workers

New research shows that extroverted workers not only "spend a lot of time interacting with others while away from work and while at work, but that the social interactions during work time are not work related."

The study found also that social isolation at the office is particularly painful for extraverts.

Suffering form a lack of company? Click here.

Will connectivity transform development?

"If I were you, I wouldn't be so quick to get rid of my landline phone" said Joel Mokyr at a World Bank Forum 2007. Ethan Zuckerman – the second panelist – wrote his own summary of the event.

The bottom billion

In his brand new book, Paul Collier calls for nonstandard solutions to fighting poverty, including "carefully calibrated" military intervention, for the 50 states who made little or no progress since decades.

IFIs - the good, the bad and the ugly

Microrate - the microfinance equivalent of Standard & Poor's - released a new report. It charges international development organizations (IFIs) with funding only the largest and safest microfinance institutions (MFIs) while leaving the most risky ones out. The result:

IFIs are not complementing private lenders, they are crowding them out of most attractive parts of the MFI market. IFIs nearly doubled (88% increase) their direct funding to top-rated MFIs in 2005 […]. Data on over 160 MFIs confirm this trend.

The report is controversial and stirred up quite a debate.

Warming War

What do Alaska, Canada, Greenland, Russia and Scandinavia have in common? They all are on the path to win big on global warming. The UK Treasury estimates that as much as 20 percent of GDP from the world economy will be at stake. Read on…

Education: India vs. China

In an op-ed (subscription required), Nicholas Kristof places his bet:

You see up-and-coming cities like Hyderabad or Ahmedabad, and it’s easy to believe that India will eventually surpass China. But here in rural Bihar state in northern India, there’s no economic miracle to be seen.

No child I met in Khawaspur had ever been vaccinated for anything. […] That’s a common problem: the government pays for school, clinics or vaccinations, but someone pockets the money and no education or health care materializes.

Those malnourished children suffer permanent losses in I.Q. and cognition, and are easy prey for diseases. There is some evidence that widespread malnutrition lowers economic growth in affected countries by two to four percentage points a year.

[…] China has many similar problems, with growing gaps between rich and poor and an interior that is being left far behind. But rural Chinese schools provide a basic education, including solid math and science skills.

Slaying laws - the Belgian way

What is Belgium famous for besides beer, chocolate and the creation of Body Mass Index? Reforming - says Vincent Van Quickenborne, the Secretary of State for Regulatory Simplification. When in 2003 he took the office, 18 out of 100 Belgians worked for the government, the administrative costs for private companies reached €9 billion a year, and the number of startups was 40 percent down compared with previous years.

Earlier this month, however, Belgium was named a top business climate reformer. Mr. Van Quickenborne explained this transformation:

• Bottom-up approach: his office gathered more than 20 thousands suggestions before abolishing over 200 regulations
• Substantial reduction in time and cost - savings of €3 billion - through the introduction of 'paperless office' featuring e-accounting, e-archiving, electronic tax filling and notary services
• The time required to start a business – the long 56 days – was slashed to 3
• The reduction in administrative burden for companies coincided with a rise of startup companies by over 40 percent

The Belgian example shows that business reforms are not the realm of developing countries only. Mr. Van Quickenborne concluded by quoting American president Calvin Coolidge: "it's much more important to kill bad laws than to pass good ones."

Four wheels at the bottom of the pyramid

Following $3 software and a $100 laptop comes the $2000 car. With the transport market at the BOP estimated at $180 billion, no carmaker can afford to laugh anymore. BusinessWeek writes:

The key is India's low-cost engineers and their prodigious ability to trim needless spending to the bone, a skill developed by years of selling to the bottom of the pyramid. "You have to cut costs on everything—seats, materials, components—the whole package," says Tata Group Chairman Ratan N. Tata.

[…] emerging markets, which held little appeal for the major car brands even 10 years ago, now offer a volume bonanza that can make even cheap cars profit spinners. In India alone, some 1.6 million motorcycle and scooter riders are likely to buy a car over the next five years […]. India's auto market is set to double to 3.3 million cars by 2014, while China's will grow 140% over the same period, to 16.5 million cars, according to J.D. Power Automotive Forecasting. That kind of demand makes dirt-cheap cars viable.