PSD Blog - The World Bank Group

SOX in India

Not everything that works in developed countries works in developing countries, but here is an example of the reverse – while the Sarbanes–Oxley (SOX) Act might not have had the expected impact in the U.S., similar reforms have had a positive impact in India, including on the share prices of Indian companies.

These governance reforms could have net benefits in a poor-governance country, like India, but net costs for companies that are already well-governed, like the U.S.

African green revolution possible says Jeffrey Sachs

Mr. Sachs et al. advises the Group of Eight [G8] leading industrialized nations at the dawn of the summit:

[G8] would most benefit the poor in Africa by first looking at what Africa is doing for itself.

Despite the opposition of some of Malawi's donors, [in 2005] President Bingu wa Mutharika and his team introduced a bold farm-input subsidy program to pre-empt the famine. At a cost of $60m, roughly $5 per Malawian, the government provided seed and fertilizer at reduced cost to more than 1m small-scale maize farmers. This represented a huge financial burden for Malawi's government, but would have been a pittance for the rich world.

The impact has stunned the skeptics and the doomsayers.

The investments in famine prevention – roughly $60m per year in farm inputs – save many more lives and are vastly more affordable than the hundreds of millions of dollars that would be needed in emergency food relief to achieve the same food outcome.

First Global Peace Index - the texture of peace

The Economist Intelligence Unit launched today a study ranking 121 nations by their 'absence of violence.' The 24 indicators include internal and external factors such as levels of violence within a country, organized crime, the number of people in prison, and military expenditure.

A number of Nobel laureates, including Joseph Stiglitz, backed the study which named Norway and New Zealand as most peaceful and Iraq and Sudan as the least. For a complete ranking click here.

What the World (Bank) needs now…

Ngozi Okonjo Iweala, former finance minister of Nigeria and currently a fellow at the Brookings Institution, makes suggestions for the direction of the World Bank.

Making money and a difference?

Can big business walk the talk and effectively integrate sustainable approaches into profitable corporate strategy?

The "Making Money, Making a Difference" series of articles on The Motley Fool suggests that US firms are successfully adjusting their thinking. Articles to date cover innovative approaches at such giants as General Electric, Coca Cola, McDonalds and Procter & Gamble.

In a challenge to critics, the reports suggest that big firms can develop initiatives that tackle global issues and still serve the interests of the long-term minded shareholder.

Emerging Markets – the bubble again?

The appetite for a piece of pie from emerging markets seems insatiable. Only this year, initial public offerings in the region reached more than $50 billion doubling last year's $25 billion. The soaring demand for assets and a constant capital inflow from overseas have lowered the spreads on developing countries' bonds over U.S. Treasuries to a low of 1.50 percentage points – the lowest since 1997.

What's fuelling this trend? The Herald Tribune writes:

The strongest global expansion in a generation and the ability to borrow at low interest rates in markets like Japan and Switzerland. Those forces are drawing money into economies whose low labor costs and increasingly valuable commodities offer opportunities for higher returns.

Concerns extend well beyond China, which will account for roughly a fifth of the private capital flowing into emerging markets this year. The governor of the central bank, Zhou Xiaochuan, expressed concern on May 6 that a bubble was building in the nation’s stock market, which has already risen more than 80 percent this year.

Sound familiar?

Everyday life in Aceh: happiness is a full Bak Mandi

When the first drops of rain began to fall, I felt a powerful surge of joy. Our house had not had water in two days, and we were running short. Our well was dry, and not a drop of city water came through the pipes. In vain, my housemates and I turned the pump on, hoping for something. But the taps remained dry and we were beginning to panic.

Water is a serious issue in Aceh, in spite of abundant water available in the province. A lot of the water comes from wells, including water in our office. I can't say I'm a fan of well water – it's usually greenish, and sometimes has a strong sulfur smell (at least I hope its sulfur) and high bacteria counts.

For that reason, my housemates are fans of collecting rainwater. We have large tubs which we place at strategic points around the house when it rains. Rain runs off the roof and we can collect a lot of it when we have a good tropical storm. Rainwater is crystal clear, and tests show that it's safe to drink. There is city water, some of the time. Our house is at the end of the street, so city water rarely makes it all the way to us. According to a friend working in the water sector, over 90 percent of water from the treatment plant disappears before the water reaches the city.

The state of corruption

Transparency International focused its newly-released Global Corruption Report 2007 on judicial systems:

There is […] a correlation between levels of judicial corruption and levels of economic growth since the expectation that contracts will be honored and disputes resolved fairly is vital to investors, and underpins sound business development and growth. An independent and impartial judiciary has important consequences for trade, investment and financial markets, as countries as diverse as China and Nigeria have learned.

This 400-page-long volume adds new country-specific case studies, compares Russia with Brazil as well as other emerging economies. John Bray's section on measuring the impact of corruption on international business shows that 40 percent of surveyed firms believe to have lost international business contracts due to competitor’s bribe.

Private sector development for stability in East Timor

In a Wall Street Journal op-ed (subscription required), Paul Cleary - an Australian journalist and a former advisor to the East Timor government - links a decline in GDP per capita to instability:

In focusing on the immediate trigger for renewed conflict, however, analysts have largely overlooked East Timor's sharp and sustained decline in per capita GDP -- a sufficient condition for sending any post-conflict country back into conflict.

In the two years that I worked and traveled in East Timor there was a palpable dearth of government activity throughout the country. Labor-intensive capital works were a rarity. Youths would stare blankly when asked when they last had a job; many had never worked. Some of the small towns had no shops because the people living there had no money. Barter still remained a form of exchange in some remote areas.

A lack of financial services was partly to blame for inhibiting the flow of money. Money spent in the districts had to be physically carted around the country because there was little access to banking services outside the capital.

Out of one million residents in the country, 40 percent are unemployed, 45 percent live at $1 or less a day and only about 50 percent are literate and the population is growing at a high rate of 4 to 5 percent a year.

Find Doing Business on the map

The marriage of the Doing Business database and Google Earth has come true. The union is fully interactive and contains a variety of data on 175 economies.

Also listen to a World Bank staffer in the field tell stories of how small, often conflict-prone Pacific islands navigate the waters of reform and the Doing Business rankings.