PSD Blog - The World Bank Group

China stat of the day; plus, a turnaround in Zimbabwe?

While IFC is strengthening its involvement in India, China is deepening its economic ties in Africa.

In his opening speech at this week's Forum on China-Africa Cooperation in Egypt, Chinese Prime Minister Wen Jiabao announced Beijing's latest commitment to its African trading partners, which includes $10bn in fresh loans (on top of $5bn already pledged in 2006):

We will help Africa build up its financing capabilities...we will provide 10 billion US dollars for Africa in concessional loans... China is ready to deepen practical cooperation in Africa.

China will also set up over 100 clean energy programs, and relieve or cancel the debt of 31 countries. Chinese direct investment in Africa has increased from nearly $500m in 2003 to $7.8bn in 2008.

Wen claims that this latest round of assistance comes with no strings attached:

Africa is fully capable of solving its own problems, in an African way

There is one story floating around the blogosphere that seems to highlight an African economy solving its own problems. The Telegraph is reporting an economic turnaround in Zimbabwe, which has been buoyed by the dollarization of the local economy:

Doing Business 2010: Reforming through Difficult Times

Yup, it's that time of year again...Doing Business 2010 has just been released (at precisely 9/9/09 at 00:09 GMT, no snickers please). The widely cited rankings from the report are now publicly available, and perhaps one of the most important results this year is that Rwanda has been ranked the top reformer, the first time for a Sub-Saharan African economy.

One other headline from the report caught my attention. More governments reformed this year than in any year since 2004 (the first year of Doing Business). And much of this reform occurred in low- and lower-middle income economies. The financial crisis and its impact on the global economy clearly haven't reduced the commitment of governments in the developing world to improving their business environments. 

Here are a few more highlights from the report:

Since 2004 Doing Business has been tracking regulatory reforms aimed at improving the ease of doing business. Despite the challenges presented by the financial crisis, the number of reforms hit a record level this year. Between June 2008 and May 2009, 287 reforms were recorded in 131 economies, 20% more than the year before. Reformers focused on making it easier to start and operate a business, strengthening property rights and improving the efficiency of commercial dispute resolution and bankruptcy procedures.

Agricultural FDI: Global land grab or good business?

Editor's Note: Kusi Hornberger is an Investment Policy & Promotion Specialist with the Investment Climate Advisory Services of the World Bank Group.

Despite the recent downturn in global FDI flows and predictions of gloomier times to come for cross border investment flows, there has been a recent increase in FDI by wealthy investors from resource poor countries. These investors have been snapping up large plots of land in developing countries for the development of agriculture exports. For the most part the deals have come from wealthy investors or state development funds in resource-poor countries into poor resource-rich countries, such as the lease of 30,000 hectares by the Abu Dhabi Fund for Development in Sudan.

Presidential medals and credit bureaus

Microfinance received a nice fillip recently when Muhammad Yunus was awarded the Presidential Medal of Freedom by U.S. President Barack Obama. While Yunus's rockstar status has helped put the access to finance agenda center stage, I wonder if it might obscure some of the hard work that goes on behind the scenes. Perhaps the phrase "credit bureaus" may not cause your heart to race, but in some countries this is really where the action is at.

Business Associations: Good for businesses, bad for taxpayers and consumers?

In The Rise and Decline of Nations, Mancur Olson argued that interest groups like business associations (BAs) always pursue distributive objectives, seeking unproductive rents rather than benefitting the public. Subsequent work on collective action culminating in the New Institutional Economics continued to adopt this negative view of BAs.

Nevertheless, examples of BAs working toward more productive goals keep showing up in various studies. For example, Doner and Schneider (2000) point out that the Kuwait Chamber of Commerce and Industry played a key role in pushing for customs reforms during the 1980s; inter-industry associations in the state of Punjab, Pakistan, forced the state government to improve power supply and the Colombian Coffee association, Federacafe, helped provide better transportation infrastructure, port facilities and warehouses to its members.

The smart economics of educated women

Editor's Note: Jennifer Yip is a consultant for the World Bank Group's Doing Business team.

At an age when mothers admonish their children to finish their brussels sprouts, my mother issued warnings about the importance of getting a PhD if I wanted to gain the respect of my future husband. Those warnings were followed by the oft-repeated reminder that I should "marry well, so you don’t have to work if you don’t want to."

Twenty years and a couple of degrees later I’ve often wondered how those two pieces of advice go together. What is the point of getting an advanced degree if I eventually decide not to work? 

Income (in)equality among the professoriate

“Salary progression”—the difference in salary between junior and senior professors—in general appears modest compared to the situation in the professions outside academe. According to our research, for most of the 15 countries in the study, salaries seldom doubled between entry level and senior ranks. The major industrialized countries (including Germany, France, Canada, the United States, and the United Kingdom) stood at the bottom, in terms of variations between junior and senior ranks, and the developing countries (such as China, South Africa, Argentina, and others) at the top. India ranks poorly on both progression and on basic salary. The lack of possibilities for improved salaries is a problem for the profession in general, but it is particularly damaging for the most productive academics. The latter are the most likely to leave academe or to go to countries with higher salaries.

That is from a new article by Philip Altbach, Director of the Center for International Higher Education, called The Intricacies of Academic Remuneration. Of course, we must take into account the many types of non-income remuneration that academics receive. But still I wonder - what are the chances that the professiorate (or Ministries of Education) would permit the kind of income dispersion that is normally seen in the (purely) private sector? I'm not holding my breath. 

The hidden side of globalization

In debates over globalization, much attention is given to so-called 'North-South' relationships. Often, data on 'South-South' exchanges it too limited to say much. A new paper on Global Migration of the Highly Skilled by Theo Dunnewijk of United Nations University helps shed some new light on 'South-South' brain drain/brain strain/brain circulation (Hat tip: Giulio Quaggiotto). Previous datasets had overlooked diasporas of highly skilled workers in these countries:

• South Africa originating in Zimbabwe, Botswana, Namibia and Lesotho;
• Russia from Kazakhstan, Ukraine and Belarus;
• Ukraine, from Brunei Darussalam;
• Czechoslovakia (former) from Iran;
• Malaysia from China and India;
• Latvia from Israel;
• Romania from Moldova;
• Jordan from Palestine Autonomous Region;
• Tajikistan from Uzbekistan;
• Bulgaria from Greece

Is this brain drain, brain strain, or brain circulation? Dunnewijk doesn't tell us - a topic for another paper, perhaps.

Crunch time for microfinance - final thoughts

CGAP ran a virtual conference last week on microfinance and the financial crisis. (See their website for details and an earlier post on the first round of emails from the conference.) There was a ton of interest in this topic, reflected in the extraordinary volume of communication from all over the globe. To make things easy for you, I pored over the emails to bring you more highlights from the first half of the conference, which focused on MFIs and their clients:

Daniel Mensah from Ghana:

I am a member of the credit union movement in Ghana, West Africa. At a recent meeting of some of the credit union executives, it was reported that the number of members taking loans or withdrawing their savings is going up. Among the many reasons given was that the financial crisis has reduced the inflow of remittances from citizens/relations abroad and so many members now have to fall on their savings or take loans.

China is not the only one courting Africa

Turkey is making big strides in building relations with Africa. The Jamestown Foundation reports that:

Turkish interest in Africa is underwritten by soaring bilateral trade: while Turkey's trade volume with the entire African continent was $5 billion in 2003, Gul noted that with government encouragement, Turkish-African trade had been increasing annually by double digit figures since 2004 and exceeded $12 billion last year, a figure that his government hoped to increase to $30 billion by 2010.

The article also reports that Turkey brings a lot of agricultural expertise to bear. Perhaps this kind of partnership will bring more development benefits than the results reported by UNCTAD in Economic Development in Africa: 2008.