PREM Notes

176 items available

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This note series is intended to summarize good practices and key policy findings on poverty reduction and economic management (PREM) topics.

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  • Publication
    The Changing Politics of Tax Policy Reform in Developing Countries
    (World Bank, Washington, DC, 2013-02) Moore, Mick
    Who shapes tax policy reform in developing countries? A wider range of political actors are beginning to exercise influence. A brief history in this report will explain who they are and how they operate.
  • Publication
    Strengthening PFM in Post-Conflict Countries: Lessons for PFM Practitioners and Country Programming Staff
    (World Bank, Washington, DC, 2012-12) Fritz, Verena
    Myriad challenges, but also opportunities, surround public financial management (PFM) reforms in postconflict environments. This note provides recommendations that focus on the special characteristics of postconflict environments and their implications for the design and implementation of PFM reform initiatives, and on links to the wider goals of state-building and service delivery. This note principally draws on a cross-country review of the design, implementation, and impact of public financial management (PFM) reforms in eight postconflict states. Focusing on the PFM reform experience over a 7–10-year period from the early 2000s to 2010, the goal of the study was to understand what has worked in countries’ efforts to strengthen PFM systems, and how PFM strengthening impacts wider state-building goals.
  • Publication
    Using M&E to Support Performance Based Planning and Budgeting in Indonesia
    (World Bank, Washington, DC, 2012-11) Ahern, Mark; Beard, Victoria A.; Gueorguieva, Anna I.; Sri Handini, Retno
    Since 2000, there has been growing interest in reforming Indonesia s budgeting systems to promote a more performance-orientated process. Indonesia is in the initial stages of this reform. A major challenge is determining the information needs of the central coordinating ministries. To date, these ministries have taken separate paths, developing their own monitoring and evaluation (M&E) systems, which are not linked to the planning and budgeting system, and creating new regulations and institutions to manage them. The result has been underused information and a high reporting burden at all levels. Furthermore, the current system places a greater emphasis on monitoring rather than evaluation. In 2011, representatives from the coordinating ministries participated in a series of high-level round table discussions to identify the steps needed to rationalize and coordinate M&E practices across institutions and to strengthen the links among data collection, evaluation, planning and budgeting. The round table process has confirmed that, while coordination is needed, establishing incentives for the demand and use of M&E information is critical to making the systems effective. This note identifies priority areas for future action building on this finding.
  • Publication
    Performance, Monitoring, and Evaluation in China
    (World Bank, Washington, DC, 2012-09) Wong, Christine
    Amidst all the hoopla about China's rise, it is useful to remember that China is a developing country whose transition to a market economy is not yet complete, with institution building still underway. The uneven pace of progress is reflected in the state of its public sector, but in some respects, China s public sector looks formidable. Most often mentioned is the government s treasure chest of US$3 trillion in foreign reserves. Even more enviable, government revenues have grown at annual rates of over 20 percent for a decade (China statistics 2011), fuelling a steep fiscal expansion at a time when so many countries are being forced to undergo painful consolidations. The government s reputation was further burnished in the post-Lehman global financial crisis, when, after a brief, though sharp, downturn in 2008, China became the first major economy to return to robust growth, propelled by a stimulus program that was, in relative terms, by far the biggest in the world. The bold stimulus and quick economic recovery seemed to show off an effective public sector able to implement national policies swiftly.
  • Publication
    The Fiscal Management of Natural Resource Revenues in a Developing Country Setting (or How to Design a Fiscal Rule If You Are Not Norway)
    (World Bank, Washington, DC, 2012-04) Eckardt, Sebastian; Sarsenov, Ilyas; Thomas, Mark Roland
    The exhaustibility and volatility of natural resource revenues pose well-known economic challenges, of which those facing oil producers are the most prominent. If oil revenues represent an important share of export earnings and of government revenues, then they can be part of overheating during booms and costly adjustments during downturns, making fiscal policy exacerbate volatility. At the same time, considerations of intergenerational equity suggest that fiscal policy should also preserve part of current oil revenues for future generations. To address both of these challenges, resource-rich countries commonly establish commodity funds, into which part of their resource-linked revenues are deposited and invested in income-generating assets (usually offshore financial assets). A key question in designing such funds is what share of current revenues should be spent and what share saved. Based on recent advisory services offered to the Ministry of Economy and Trade in Kazakhstan, this note summarizes one possible approach, aiming to provide rule-based anchors for sustainable fiscal policy in an oil-producing country. This approach applies traditional permanent-income and debt sustainability frameworks, but adapts the resulting recommendations to the institutional context of the country. Rule-based fiscal frameworks offer strong benefits to countries that are generating significant government revenue from extractive industries. As commitment devices, these frameworks can reinforce fiscally responsible economic management, contain volatility, and preserve fiscal savings for future generations.
  • Publication
    New Open Economy Industrial Policy : Making Choices without Picking Winners
    (World Bank, Washington, DC, 2011-09) Kuznetsov, Yevgeny; Sabel, Charles
    This note starts from the premise that policy makers invariably make mistakes, both intentional and unintentional. That requires shifting the focus from one-time choice of winners (sectors, industries, firms, and other organizations) to the process of error detection and error correction of the choices (with corresponding attention to governance). This note shifts the debate on government activism in support of globally competitive industries from a choice of picking/dropping winners to a process of step-by-step transformation of private and public sectors. In such a process, new industrial policy creates its own context for efficient design and implementation in two ways. First, by shifting the focus of analysis and institutional design from private sector to a new public sector capable of providing customized and flexible public goods and enabling private agents to compete globally. The key concept here is heterogeneity (discretionary differences) of institutions: it is almost always possible to find some that are working. The issue is using the ones that work to improve those that don't. This hypothesis assumes that there are nearly always opportunities for development in a given economy, and that some actors, private and public, begin to take advantage of them.
  • Publication
    Measuring National Income and Growth in Resource-Rich, Income-Poor Countries
    (World Bank, Washington, DC, 2010-08) Hamilton, Kirk; Ley, Eduardo
    In the decade leading to the recent commodity boom, which peaked in 2007-08, several resource-rich, low-income countries displayed high rates of gross domestic product (GDP) growth while social indicators did not improve significantly. It is well known that, in itself, the widely tracked GDP may not be the most relevant summary of aggregate economic performance in all places at all times. This note suggests that for countries with significant exhaustible natural resources and important foreign-investor presence, adjusted net national income (aNNI), can usefully complement GDP to assess economic progress.
  • Publication
    Can Carbon Labeling Be Development Friendly?
    (World Bank, Washington, DC, 2010-07) Brenton, Paul; Jensen, Michael F.
    Carbon accounting and labeling for products are new instruments of supply chain management that may affect developing country export opportunities. Most instruments in use today are private business management tools, although the underlying science and methodologies may spread to issues subject to public regulation. This note seeks to inform stakeholders involved in the design of carbon labeling schemes and in the making of carbon emission measurement methodologies about an overlooked issue: how can carbon labeling are made to be both developments friendly and scientifically correct in its representation of developing-country agricultural sectors? As a result of the pressures placed on designers and users of carbon accounting and labeling instruments, there is a risk that carbon accounting and labeling instruments will not properly represent the complexity of production systems in developing countries.
  • Publication
    What is the Role of Carbon Taxes in Climate Change Mitigation? (revised)
    (World Bank, Washington, DC, 2010-04) Aldy, Joseph; Ley, Eduardo; Parry, Ian
    This note argues that a carbon tax system is more practical to implement, monitor, and enforce than tradable permit-based approaches to global climate-change action. It suggests that a sensible design will be an upstream carbon tax on the fossil fuel supply chain, which can also include other major non-carbon dioxide (CO2) greenhouse gases (GHGs). While risks such as fiscal cushioning exist, a tax-based system will be more transparent and offer the appropriate incentives for participation and compliance.
  • Publication
    Natural Resources and Development Strategy after the Crisis
    (World Bank, Washington, DC, 2010-01) Brahmbhatt, Milan; Canuto, Otaviano
    Recent events have rekindled interest in the role of primary commodities in development. Was the boom in commodity prices from around 2003 through 2008 just a cyclical event, or does it suggests that prices have entered on a period of secular strength, driven by factors such as demand in big, fast growing developing countries like China? It is notable that, while commodity prices fell sharply from their peak in 2008 with the onset of the global recession, they generally remained much higher than previous recession lows, often as high as in 2005-07, a period of robust world growth. Furthermore, prices have also rebounded smartly over the course of 2009. If a period of sustained commodity strength is imminent, what are the implications for development policies? Development economists have long debated the problems associated with the traditionally high specialization in production and export of primary commodities of most developing countries. Many argue that dependence on primary commodities has proved to be a poisoned chalice or curse for development, which, given this view, necessarily entails structural change and rapid industrialization. Others, however, suggest that sustained high commodity prices could reduce the relevance of an industrialization-focused development strategy for commodity-dependent, low-income countries (LICs). In this note authors briefly review four questions: how dependent are developing countries on primary commodity exports? What is the outlook for primary commodity prices? Is there a natural resource "curse" (or blessing)? What policies can help poor countries best manage commodity resources for long-run development?