PSD Blog - World Bank Group

Telecoms talk at the WTO

Daniel Annerose, CEO of Manobi, an African mobile data services company, and José Alfredo Rizek, executive director of Indotel, the Dominican Republic's telecoms regulator, joined in a telecommunications services debate hosted by the WTO (video available).

They discussed the 10th anniversary of the Basic Telecommunications services deal and its implications for governments, consumers, businesses, and for development.

Socialist legacy: aversion to equality?

A new paper titled, Attitudes to equality: the "socialist legacy" revisited, analyzes whether residents of post-socialist countries have "a preference for greater income equality, other things being equal, owing to the legacy of socialism." Surprisingly or not, the authors find little evidence that supports this claim.

The authors compared the preferences of former Soviet Union countries to those of other Eastern Europe and other groups of developed and developing countries. They found that as a group, there is a significant lower preference toward moving to greater income equality!

One cell phone for every two humans

"Eventually there will be more cell phone users than people who read and write," says Eric Schmidt, chairman of the board and chief executive officer of Google in a recent article by the Washington Post. The article has some interesting facts about how cell phone technology grew so fast since its creation that no one could predict the magnitude of this expansion.

There's a particularly interesting anecdote that illustrates how unpredictable cell phone expansion has been. Mckinsey & Co., the consulting firm, in 1980 underestimated what the size of the cell phone market would be in the year 2000. Its number was not even 1 percent of the actual market size in 2000.

Teaching a new dog an old trick?

Will online social investment markets replicate the flaws of traditional development models, or will they improve their effectiveness? That's the question raised in a new report that provides some empirical evidence to the so far rather anecdotal argument that we are shifting towards a Development 2.0 paradigm.

In theory, start-ups like MyC4 or GiveIndia begin from a clean slate and therefore need not fall in the same traps that hampered the effectiveness of traditional development players.

However, the analysis of 24 online social markets leads the authors to conclude that, whilst they are "relentless innovators" that succeed in attracting a new donor base, their transformative power is hindered by an all too familiar problem to "old" development players – the lack of reliable performance data and a common reporting framework.

Starting a business: help from Harvard Business School

Harvard University's Working Knowledge compiled resources for those thinking about starting up their own business. Topics include legal issues associated with new enterprises, managing resources, product development, and keeping owner control.

As a bonus here's other useful information for entrepreneurs on the ease of doing business across 178 economies.

Microfinance: so good it's fit for children's bedtime story

A recently published children's book titled, One Hen: How One Small Loan Made a Big Difference, tells the tale of a young Ghanaian boy, who with the help of a small loan is able to dramatically improve his living conditions with his widowed mother. Kojo, the protagonist boy, buys one hen after receiving a loan from his mother and then sells eggs to his community. After saving and soundly investing he is able to expand his operations and eventually can afford to attend college.

Kojo’s story is based on the life of Kwabena Darko, who created in 1994 Sinapi Aba Trust, which engages in microfinancing in Ghana. The only hope is that if Cinderella doesn't spark development ideas, perhaps Kojo will. 

Joining the dialogue: Environmental Capital

Following up on today's theme, it's worth adding the recent addition by the Wall Street Journal - it's own blog about the business of the environment. Here's more from the editors themselves:

"[This blog] tracks how growing green concern, particularly over climate change, is roiling established industries and spurring new ones – and how that shift is affecting investors, consumers and the planet."

Putting a price on carbon: time to get hands-on

The recent spate of announcements by financial institutions looking forward to a world with a price on carbon - and their decisions to set a price for carbon in their own calculations on project viability or to adhere to generic principles on carbon which may influence the future shape of their portfolios - are the latest evidence of a world preparing itself for some kind of public policy context to emerge from international negotiations. But perhaps of equal significance is evidence that the risks and opportunities from managing exposure to carbon are seen as real and present, not potential and distant.

To dig down into performance and beyond rhetoric a number of challenges face financial institutions. A carbon price helps one understand risk in a future where carbon carries a price, but how do you decide where to invest in carbon intensive projects and where not?

Internet for all

It is estimated that 1.1 billion people have Internet access world-wide. That still leaves out a large number of potential Internet users, or potential costumers, depending on how one looks at it. That's probably why some entrepreneurs have been tackling the issue of how to close this divide.

One interesting approach was taken by Meraki, a Silicon Valley technology company. It developed cheap and simple network devices that allow ordinary Internet users to set up networks and share costs so that more people can connect. The company, which was named a "Technology Pioneer" at the recent World Economic Forum, has helped extending wireless Internet in about 70 countries.

Have you heard of other creative approaches to this issue?

Too much or too little - the paradox of information for development

"The paradox of the human rights community is that it is an information-processing industry that has limited access to information technology" says Jim Fruchterman, the winner of the Skoll Award for Social Enterpreneurship in 2004 and 2006 and founder of Benetech – an organization that creates technology used by human rights and literacy program workers.

Benetech's own Web site goes on to observe that "human rights groups throughout the world gather massive amounts of violation data. Much of it never reaches its full potential or intended audience."

Isn't the same paradox common to other areas of the development sector, including policy making and private sector development?

Gemloc Program selects PIMCO and Markit

In a new development, the World Bank Group chose PIMCO and Markit for Gemloc Program to increase investment in emerging markets.

The World Bank Group launched the Gemloc Program last October to help emerging market countries attract more investment and develop their local currency bond markets.

How can we improve?

It's that time of the year again when the Rapid Response Unit – a joint World Bank and International Finance Corporation initiative, which hosts the PSD Blog – asks its users for feedback. The survey is short (took me 42 seconds to answer all questions) and as a thank you perk, two responders will win an iPod shuffle red.

Cuba's leader Fidel Castro resigns

After 49 years as a head-of-state, Fidel Castro has announced today he is officially stepping down as Cuba's president. Given that Castro has been resistant to business-friendly reforms, his resignation gives some commentators the hope that his likely successor, Raul Castro, will bring about some much needed reforms. There is particular hope in giving farmers more independence and engaging more with neighboring economies besides Venezuela.

Global warming gets cool in Japan

A group of business leaders including executives from global corporations like Sony, Nike, and Nokia singed the Tokyo Declaration this week. The signatories expressed concern over greenhouse gas emissions and said that such emissions need to be reduced by 50 percent by 2050. Thanks.

On that same note, a McKinsey Quarterly survey finds that 60 percent of global executives consider climate change an important issue to take into account within their companies' overall strategy.

Recession intervention: more Valentine's Days

Arguably more efficient than the U.S. government's stimulus package, Valentine's Day will inject $17 billion into the economy. However, Cupid is not so economically powerful everywhere lovebirds celebrate the holiday.

Can you hear me now?

The importance of cell phones for isolated communities and different applications of mobile technology have been the subjects of much debate.

A new paper suggests that an increase in competition policy in sub-Saharan Africa, to at least the same level as that of the best-performing countries in the region, could almost double overall cell phone coverage. However, the authors highlight that more targeted work would need to be done to eliminate the digital divided between rural and relatively dense areas.

Wal-Mart should win Nobel Prize...for what?

"Wal-Mart deserves the 2008 Nobel Peace Prize. And the Vatican may want to beatify the world's largest retailer." That's how a Canadian journalist leads his article in entertaining fashion.

He argues that the giant U.S. retailer should be the recipient of the 2008 Nobel Peace Prize, among other reasons, because it creates thousands of jobs each year in developing countries.

For other do-gooders, and now presumably Nobel Prize contenders, check out Forbes' piece on corporate citizenship.

Sustainable tourism competition open

Proponents of "geotourism" believe that it benefits local residents in many ways, including economically, since travel businesses strive to use local workforce, products, and services.

A new National Geographic competition aims to raise awareness to ways geotourism may be beneficial to the local communities. Winners will be innovators in geotourism and applications are now open through April 9.

If you are part of a committed organization or governemnt you can also sign the "Geotourism Charter" (p.s.: totally non-binding and unenforceable).

Africa: (self-powered) light at the end of the tunnel

Actor Tom Hanks is better known for his role in Forrest Gump than for his work with self-powered energy. But that might soon change, at least for some people in sub-Saharan Africa, where Hanks is funding a project that will create assorted lights and lanterns to serve an area where less than 15 percent of the population has proper lighting.

These devices work by transforming winding-up motion into electricity and in some cases one minute of winding can generate two hours of lighting. The company making the products cites several applications for its devices including enabling businesses to stay open later and increasing night-time studying hours. They can also power radios, and other devices such as the "One Laptop per Child" laptops.

Maybe with oil prices breaking $100/barrel and having much of our electricity generated from oil, these devices will become commercially viable in the west as well.

Web 2.0 ideas for the World Bank, anyone?

A colleague down the road is collecting ideas for Web 2.0 business models and services that could be adopted by the World Bank Group. Here are some initial thoughts and there's a number of projects well on their way.

So if you have any suggestions or recommendations help brainstorming and leave a comment below. (By the way, if you happen to be a developer, you might want to move from thought to action at the Social Innovation Camp in April).

More cell phones, better grain prices

We already know that cell phone technology has enabled lots of people in remote areas to access bank accounts and government services. But here is a new one: a recent paper creates a model that predicts that cell phones in Niger will lead to a reduction in price dispersion. This would be true since cell phones enable grain traders to perform searches for better prices in areas where it would otherwise be too costly to search.

Interested? Register online for a discussion with the author held by the Center for Global Development in Washington, D.C.

A year older, and more popular

As my tenure at the PSD Blog ends today, I'm reminded of a great year during which this blog celebrated its second birthday and became one of the World Bank's most popular sites.

Going foreword, PSD Blog is always looking for fresh talent. If you're a World Bank staffer and favor market solutions to development, talk to Alan about a possibility of guest blogging.

If you are one of our readers, thank you. You're in good hands.

Privatization in 2006 - the year of Chinese IPOs

Our privatization database – listing transactions of at least $1 million from 2000 to 2006 - has been updated again.  In 2006, 48 developing countries carried out 249 privatizations for a total value of $105 billion – a figure comparable to the record year 1997.

The graph below depicts the value of privatization transactions in developing countries between 1990 and 2006. The figure excludes the two IPOs of the Industrial and Commercial Bank of China and the Bank of China, which combined accounted for $35 billion - one-third of all proceeds in 2006:

Russia and Turkey followed China into the second and third place, while Poland bucked the general trend toward privatization that year.

Our interactive map has the full picture.

Doing Business in China

The Economist reviews 5 books on doing business in China.  We supplement it with 10 indicators that measure the ease of running one.

Outsourcing too expensive

A new study by the Boston Consulting Group finds that outsourcing to China and India did little or nothing to save costs for many of the original equipment manufacturers (OEMs).

About two-thirds of the manufacturers in the survey reported unit costs in China equal to or higher than those in their home countries. The authors point to diseconomies of scale and higher quality control costs as main causes.

Where does the aid go?

If you believe that a picture is worth a thousand words, this interactive aid map is for you.

The business of carnival

Rio de Janeiro is the home of Brazil's best 14 samba schools, some with individual budgets of up to $2.5 million.  As the floats get bigger and bigger requiring the work of more and more artists, Rio's Department of Labor recognized the business potential of the famous street party. 

Nassim Mehedff, the subsecretary of the Labor Department, explains why the city began providing free classes that teach people how to make costumes:

Now [the carnival] is becoming an industry, entertainment industry. They provide jobs and income for people during the whole year, not only a kind of two or three day festivity

Winning at the bottom of the pyramid

Long before Bill Gates gave his "creative capitalism" speech at Davos, the Financial Times and the IFC had been spreading the word through the annual FT/IFC Sustainable Banking Awards.

Although it is tough to compete with Gates when it comes to getting media attention, this year's awards will include a new category: "Banking at the bottom of the pyramid," which will acknowledge financial institutions that create innovative products to serve the poor.

The deadline for submissions is February 29. Details on their Web site.

New blogger: Alan Pereira

Some were complaining that the PSD Blog is missing one particular thing – its own lawyer. Well, not anymore.

Alan Pereira, an attorney and once upon a time an editor of a college newspaper, has joined the team. Currently working on the Gemloc Program, he will keep us abreast of his unit's work and write on issues of general interest.

Alan - without objections - welcome.

Sachs on private sector development in poor areas

In an interview with the Ivey Business Journal, Jeffrey Sachs talks about "clinical economics," corruption, business environment, social responsibility and natural resources in Africa:

[…] there are lessons about operations in very low-income settings. These things are typically very standardized. They depend often on mass production according to relatively straightforward technologies.

[…] Countries have learned, especially in the Asian experience, how to economize on infrastructure, for example, by concentrating industrial activities in industrial parks or export zones where basic infrastructure is guaranteed even when, at a country scale, it's far from adequate. So there are methods that have been developed very successfully to economize on the lack of economy-wide skills or economy-wide management or economy-wide infrastructure and those same lessons will surely apply in the African context

Development 2.0, the book

This book from Brookings, which I just ordered, promises to be a very interesting read.

Gender in migration

So far we have learned a lot about migration. But even though women account for nearly a half of all migrants, we still know little about the impact that gender has on labor markets participation or the amounts of money sent back - estimated to reach nearly $200 billion a year.

A new book - hoping to fill the gap - focuses on the differences behind men and women's decision to migrate and remit.  It also points to some understudied aspects of migration such as family cohesion and trafficking of women.