PSD Blog - The World Bank Group

iPhone is out, now is time for iWait

Conan O'Brien's new video shows what makes iPhone the ultimate smart phone. And the Solutions Research Group analyzed the buyer profile of Apple's $500 ipod-cell phone-internet device: 72 percent male, average age 31 and average income $75,600 – 26 percent higher than U.S. average.

The rumored 3 million iPhones, which will be released at the end of the day today, are likely to be sold out. But affluent Apple enthusiasts don't have to take chances with limited supply. The market has found a solution and it runs at about $700.

FDI in the Balkans - lessons from Ireland

"There's no silver bullet for this business" says Dermot Coffey, a World Bank staffer with 30 years of experience promoting FDI in Ireland; instead start with a question: why is a country incapable of generating employment for its people?

Last year the FDI inflows/GDP ratio in the Balkans exceeded 10%. But the trend is likely to decline as privatization opportunities are running out, leaving countries to have to work extra hard to attract investment. Coffey, in less than 10 minutes, explains how to do it.

House them or lose them

For many workers in Chennai – India's automotive hub – the tables have turned. Rising demand left business scrambling to retain workers, but local SMEs discovered a remedy:

providing three pairs of uniform, two pairs of shoes, hot meals and transport facility, are a must for retaining people.

But it's no free lunch:

[These measures] ensure there is no late coming and it is possible to have flexible production schedule. If there is a delivery tomorrow, workers are available right away.

Connecting microfinance to markets

Microfinance remains a donor-dominated industry, but it does not have to be. The entire industry, currently at about $17 billion, is estimated to reach as much as $300 billion over the next 20 years.

A new report examines the involvement of public and private capital with global microfinance business, mapping out the range of financial products available to the poor:

Morgan Stanley pioneers the trend, but the lack of globally acceptable standards still stands in the way of scaling up investments.

Women doing business

When Huda Janahi first applied for a business license in Bahrain, she was turned down. Not because she didn't have the right paperwork, nor because she didn't go through the required procedures, but because a woman had never previously applied. Not to be deterred, Huda registered as a family owned business and got on with the business of making money. She later re-applied successfully in her own name. Now her business, Global Freight & Passenger Services is a multimillion dollar company.

Women's participation in the formal sector as well as business registration is contingent on a range of variables, many of which are outlined in the Doing Business report. The theme for Doing Business 2008 will be Opportunities for Women. It will consider ways in which ten indicators help or hinder women's participation in private sector activity across various economies.

If you have interesting examples to contribute, please let us know.

The Jeffrey Sachs & William Easterly saga

In the July issue of Vanity Fair Jeffrey Sachs calls for more aid money. This time it's $200 billion a year – about twice the current spending: "it's much cheaper than giving food aid, it's much cheaper than having wars, and it's much cheaper than having mass migration" he says. William Easterly, writing in Foreign Policy, is not short for words (see also the impressive illustrations by Mike Benny). He calls the World Bank the "high church of Development" and goes on to dispute Mr. Sachs' view:

Unfortunately, Development ideology has a dismal record of helping any country actually develop. The regions where the ideology has been most influential, Latin American and Africa, have done the worst.

Showing tangible results, Mr. Sachs points to the Millennium Villages Project – a poverty eradication experiment – in which each chosen participant receives $110 allocated each year for five years in the form of: fertilizer and high-yield seeds, clean water, rudimentary health care, basic education, mosquito bed nets, and a communication link to the outside world.

Hedging climate change bets

The recent G8 summit failed to reach agreement on proposals for even a voluntary code of conduct for the world's 9000 "locust" hedge funds with an estimated value of $16 billion as reported on Spiegel Online. However, while there may remain disagreement over transparency issues, it seems G8 leaders might applaud hedge funds for taking the initiative on another key G8 theme - climate change.

Hedge funds are jumping on the green investment bandwagon. As reported in the UK's Observer, Schroders are launching a climate change fund, adding to a number of green investment products already on the market. Even Man Group, the largest listed hedge fund worldwide, has announced plans to get in on the act. As reported on thisismoney, Man's Chairman Harvey McGrath sees "significant further developments" around carbon trading and the "green space."

Little book, lots of data

Whether it's a county's GDP, its total tax rate or the cost of a three-minute telephone call to U.S. – this pocket-sized reference book has it all.

It's a must have for all development wonks.

Life and death in Dushanbe, or the failure of regulation

In my last post I spoke about the potential harmful effects of a lack of proper regulation due to corruption. Unfortunately, just 2 weeks later we have a very sad proof of this - the death of 2 friends.

Let me tell you more about it. The streets of Dushanbe are famous for having 2 traffic police (the GAI) every 50 meters, especially along the main street, Rudaki Avenue. Traffic police are famous for stopping cars at any time and the reason is clear to everybody. All of this petty bribery would be acceptable, if they were at least maintaining a minimum safety level along the area they patrol. This is not the case - accidents are very frequent, cars drive at high speed in the streets … and people get KILLED at 11 pm in the centre of town by cars traveling 100 km/h. This is what happened to our 2 friends working in Dushanbe the night of June 21st, but it is not an isolated case. It is very sad … we are all very sad.

In a conference this week in Dushanbe, the Minister of Finance of Georgia, in describing the deep reforms undertaken by his country, told us that from one day to the next they eliminated the GAI, as they only represented a source of corruption: we are not asking that much of the Tajik Government … but it definitely is food for thought!!

Aid at random

On the topic of aid effectiveness, Tim Harford discusses a new book by "randomista" Abhijit Banerjee:

Banerjee argues that there is a solution: aid agencies should copy medical researchers and run randomised trials. In one famous trial in western Kenya, economists used the alphabet to decide randomly which of 178 Kenyan schools would receive flip charts. Because the allocation was random rather than based on need, enthusiasm or political connections, improvements in test scores or attendance were almost certain to be due to the aid programme. Previous evidence suggested that children learnt more with flip charts, but the randomised trial proved otherwise.

I would count the flip chart trial a big success. Even though the children learnt nothing, the aid community learnt a lot.

Many aid programmes are introduced gradually for want of funds; it does not take much to turn a gradual introduction into randomised delay for the purposes of finding out what works. These operations are too important to carry out with our eyes closed.