Country Economic Memorandum
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From Swimming in Sand to High and Sustainable Growth: A Roadmap to Reduce Distortions in the Allocation of Resources and Talent in the Pakistani Economy
(World Bank, Washington, DC, 2022) World Bank GroupThis report focuses on growth in Pakistan, and on key aspects of its proximate determinants: productivity, capital, and talent accumulation. Productivity is crucial in accounting for differences in standards of living across countries and time. In addition, and particularly at the level of development of Pakistan, factor accumulation, investment, and human capital, also matters. Specific and policy relevant questions around these broad themes are this report's center of attention. The underlying framework of analysis and orientation of public policy recommendations is what is known as the 'ABC' of growth. This 'ABC' implies improving allocative efficiency of resources and talent, encouraging business-to-business connections and spillovers, and strengthening firms' capabilities. Public policies oriented to create an enabling environment around these three pillars will be powerful in boosting sustainable growth. However, the efficient allocation of talent and resources, and the business-to business interactions leading to spillovers and the conditions to upgrade capabilities, are limited by economic distortions (or market failures) that inhibit the growth process, sometimes making it as difficult as swimming in sand. -
Publication
Bangladesh Country Economic Memorandum: Change of Fabric
(World Bank, Washington, DC, 2022) World Bank GroupBangladesh’s development progress over the past decades has been remarkable. Bangladesh has been among the fastest growing economies in the world. Economic development has translated into higher living standards and improved social and health outcomes. The next years will determine Bangladesh’s longer term development trajectory. The milestones ahead reflect the deep structural transformation of Bangladesh’s economy over the past decades, but also serve as a reminder that further transformation will be required for a prosperous future. Sustaining fast growth and addressing these global challenges will require overcoming three critical growth constraint. This report explores these constraints and proposes actionable reforms to sustain development. It is expected to inform the public and help the authorities design policies to achieve the goals set out in the eighth five year plan and Bangladesh vision 2041. The report focuses on three growth constraints: (i) diversifying exports and increasing competitiveness to reach the next development stage through export-led growth; (ii) mobilizing domestic and international savings to channel them toward productive investment; and (iii) upgrading urban areas, unleashing secondary cities, and improving connectivity to sustain structural transformation and increase productivity. In addition, the implications of digital development and climate change are explored as crosscutting themes across the three topics. -
Publication
Vibrant Vietnam: Forging the Foundation of a High-Income Economy
(World Bank, Hanoi, 2020-05) World Bank GroupVietnam’s development strategy requires an urgent upgrade. Past growth has been impressive. But as a favorable domestic and international environment changes, future growth must be productivity-driven—obtaining more and higher quality output from firms, infrastructure, workers and natural resources. The World Bank’s Vibrant Vietnam report discusses priorities for an upgraded growth model based on extensive consultations, international experience and academic findings. -
Publication
Madagascar Country Economic Memorandum: Scaling Success - Building a Resilient Economy
(World Bank, Washington, DC, 2020-02) World Bank GroupMadagascar is characterized by an expanding economy and a peaceful transition of power, providing a solid basis for achieving a more productive, inclusive, and sustainable growth trajectory. Given the vast opportunities, but also substantial challenges, the objective of the Madagascar country economic memorandum is to inform the policy dialogue on how the country’s inclusive growth potential can be harnessed. The country economic memorandum takes an evidence-based approach to informing policy on how opportunities for achieving productive, inclusive, and sustainable growth can be realized. Accelerating the current pace of growth requires further expanding the bright spots of the economy, which are focused on exports and investment related activities. The bright spots are creating jobs at the fastest pace, are resilient to shocks and have linkages with other sectors of the economy. Scaling success requires addressing constraints related to connectivity, human capital, and the business environment, while incentivizing the uptake of improved technologies to enable other sectors, such as agriculture, to realize their potential. -
Publication
Tajikistan Country Economic Memorandum: Nurturing Tajikistan’s Growth Potential
(World Bank, Washington, DC, 2019-05) World Bank GroupThis Country Economic Memorandum (CEM) analyzes a set of the critical constraints to domestic private sector-led and outward-oriented growth in Tajikistan, by examining the structural bottlenecks to private sector investment and exports. The report is selective in looking at key public policies needed to improve Tajikistan’s macroeconomic resilience and foster private sector development to ensure sustainable growth. This CEM should be seen as the first of a series of programmatic work intended to provide advisory support to the Tajik authorities over the medium-term as they update the National Development Strategy. The report focuses on two important areas of public policy: first, the role of the tax system in encouraging investment and entrepreneurship, examines the principal deficiencies in the tax regime and in its administration, and proposes reforms to improve the incentives for investment. Second, in view of the dominance of the state and of state-owned enterprises in the economy and regulatory gaps to ensure level playing field, the report analyzes the competition policy framework, with the aim of identifying policy reforms that will encourage firm entry and create a competitive market in goods and services. The two interrelated objectives – macroeconomic incentives for investment and savings and the domestic competition and tax regime - reinforce each other. The choice of the above thematic areas is guided by the team’s preliminary discussions with various stakeholders within the government and outside the government. The CEM builds on the World Bank’s previous reports on Tajikistan, namely on the Jobs Diagnostics and Systematic Country Diagnostics. The Jobs Diagnostics proposes the government to consider a jobs strategy based on the following three pillars: i) facilitate the creation of more jobs, particularly in the formal private sector; ii) improve the quality of existing jobs, especially in the informal sector; and iii) facilitate better access to jobs including transitions from inactivity to employment and from low to higher quality jobs, with a focus on vulnerable workers. The focus of the CEM is well aligned also with the new Country Partnership Framework (CPF) for 2019-23 currently in making. This report will be followed by analytical and policy work on other critical constraints to private sector-led growth: the establishment of a rules-based policy setting and creating market-supporting institutions that promote greater economic formalization; building upon areas of high potential for transformative change such as the financial strengths of the energy sector and macro-fiscal implications of investments to Rogun HPP; gains from deeper international integration and infrastructure access provided by the Belt and Road Initiative (BRI); and investing in human capital. This chapter of the CEM analyses the main causes of macro-fiscal vulnerabilities and suggests policy recommendations to improve resilience of the Tajik economy. -
Publication
Moldova: Rekindling Economic Dynamism
(World Bank, Washington, DC, 2019-04) World Bank GroupThis current Country Economic Memorandum is intended to provide a comprehensive analysis of growthconstraints and recommendations. While it updates some aspects of these earlier studies, its main focus is on enterprise performance. Insofar as enterprise performance occurs in a larger institutional context, this focus necessarily touches on several of the earlier themes, particularly the rule of law, business regulation, and education. The first chapter presents a diagnostic that highlights the problem of falling productivity in the enterprise sector and points to elements of market structure (particularly state ownership) that undermine productivity growth and curtail the growth of the private sector. This chapter also focuses on demand-side issues in export markets, and highlights policy lessons from sectors with high productivity that could drive future growth. A second chapter focuses on foreign firms, which are high productivity enterprises within Moldova, and looks at investment promotion and ways to improve the contribution of Foreign Direct Investment (FDI) to the economy. Subsequent chapters extend the analysis to incentives shaping enterprise performance and opportunities for growth led by the private sector, particularly: competition and regulatory policies (Chapter 3); tax policy insofar as it affects incentives and tax buoyancy that underpin macroeconomic stability (Chapter 4); and finally, education as a crucial input into enterprise development (Chapter 5). -
Publication
Angola Country Economic Memorandum: Towards Economic Diversification
(World Bank, Washington, DC, 2018-12-01) World Bank GroupThe Angolan economy is at a significant juncture. The current growth model based on oil wealth is nearly exhausted and has not delivered inclusive growth and shared prosperity. Angola faces two broad policy challenges that need to be addressed urgently: macroeconomic stabilization and a more inclusive economic growth. The internal and external imbalances following the adjustment to lower oil prices pose a challenge to macro-stabilization. The prospect of volatile oil prices and potentially diminishing oil reserves over the medium and long-term call for a new sustainable and inclusive growth model that promotes economic diversification, a model that is less dependent on natural resource exports. The new administration is aware of these challenges and has started to implement much needed reforms. Angola is right to focus on reforms that lay the foundation for long-term macroeconomic stability and economic diversification. Analyses conducted as part of this report indicate that there are significant gains to be had from such reforms. The objective of this report on Angola is to support policy makers in their reform efforts. The report is organized as follows: Chapter 1 takes stock of recent trends and determinants of growth in Angola, highlighting the importance of natural resource wealth and volatility for growth outcomes. Chapter 2 presents the findings of a growth diagnostic for Angola, and highlights low human capital, access to finance, weak institutions and macroeconomic instability as critical and binding constraints for the non-oil economy. Chapter 3 uses product space analysis to evaluate Angola’s current and future potential for economic and export diversification, drawing attention to products and services sectors in which there is potential for export upgrading and/or product innovation. Chapter 4 provides an overview of the agriculture sector and assesses its potential for economic diversification. Chapter 5 sets out the way forward, identifying: critical reforms for macroeconomic stability; a fiscal framework for natural-resource wealth management; and macro-financial stability. -
Publication
Lessons from Poland, Insights for Poland: A Sustainable and Inclusive Transition to High Income Status
(World Bank, Washington, DC, 2017) World Bank GroupThis report discusses Poland’s experience along five dimensions. These five dimensions - a pentagon of policies and institutions are governing, sustaining, connecting, growing, and including. The main lessons from Poland and the key insights for its future, based on this pentagon, are presented in the lessons and insights summarized in this report. Poland’s experience underlines the importance of a shared vision to sustain continuing reforms. Poland’s rapid economic ascent created new challenges: the creative destruction on which the growth process was based, successfully, caused massive social change. The report addresses two sets of questions. First, what are the lessons from Poland’s remarkable transition to high income?; what policies were behind Poland’s economic achievements?; why was Poland able to achieve high-income per capita so fast, while many other countries remained in the upper-middle-income range for decades - trapped middle-income countries (MICs)?; what policies were similar to those pursued by other new high income countries (HICs) and what were specific to Poland?, and second, what are the insights for Poland going forward? Given international experience and Poland’s characteristics, what policies can it adopt to continue its ascent and reach the much higher incomes of countries that have been high income for a considerable period - the established HICs? -
Publication
Kenya Country Economic Memorandum: From Economic Growth to Jobs and Shared Prosperity
(World Bank, Washington, DC, 2016-03-01) World Bank GroupThe Kenya CEM has five main messages. First, Kenya has performed well in the past decade in terms of economic growth, and modern services are behind the acceleration of growth. Expansion in these services, such as financial intermediation and mobile communications have stimulated demand for other services such as trade. The CEM discusses how to maximize the potential of services, especially given that most formal, high quality jobs are created in this sector. Second, agriculture, which still contributes to over a quarter of the economy, and manufacturing have stagnated. The CEM discusses the reasons behind this stagnation, noting that agriculture and manufacturing have not been able to create enough jobs for Kenya's growing working age population. Most of the jobs are created by the informal economy and are concentrated in low productivity segments of trade, hospitality, and jua kali. Improving the ease of doing business is one way towards job creation and higher productivity. However there is still a need for creating job opportunities for the rural poor, for poverty reduction and achieving shared prosperity. Reviving agriculture, in particular, remains the pathway for poverty reduction. Third, accelerating growth to meet Kenya's development goals requires technological advances and innovation that raise firms' productivity. Fourth, achieving rapid growth will require macroeconomic stability to boost investment and savings. And as the government strives to build Kenya's energy and transport infrastructure, this needs to be complemented with improvements in the public investment management process and better execution. Fifth, the discovery of oil opens a possibility for raising Kenya's growth. Kenya's recent oil discoveries, if used prudently, can contribute to achieving the Vision 2030 goals. The World Bank Group is proud of its long-standing relationship with Kenya, and looks forward to continuous collaboration with both National and County Governments and other partners. Working together, Kenya can realize its potential to lift millions of families out of poverty and achieve shared prosperity. -
Publication
Doing Business Reform Memorandum: Bulgaria
(World Bank, Washington, DC, 2015-10) World Bank GroupBulgaria experienced strong economic growth prior to and shortly after joining the European Union (EU) in 2007. Under the better regulation program, the government adopted over 100 measures to reduce the regulatory and administrative burden, but no formal mechanism was introduced to regularly monitor and review its implementation at the national or municipal level. Some areas, in which entrepreneurs expected to see improved efficiency, actually saw setbacks. The time needed to get a construction permit, import license, or operational license almost doubled between 2008 and 2013, and senior managers of firms reported that they were spending more time, 22 per cent in 2013 , dealing with public officials or public services than in 2008, when it took 14 per cent of their time. The final diagnostic study considered in this memo is the Doing Business report, which is also the basis for the reform recommendations presented in the document. According to last year’s Doing Business report, business regulation in Bulgaria varies significantly across the areas measured. Bulgaria is among the global top 50 performers in 4 of the 10 areas, specifically, protecting minority shareholders (14th), getting credit (23rd), resolving insolvency (38th), and starting a business (49th). Bulgaria‘s performance lags behind in four areas, getting electricity (125th), dealing with construction permits (101st), paying taxes (89th), and enforcing contracts (75th).