Country Economic Memorandum

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    Escaping the Low-Growth Trap: Guinea-Bissau Country Economic Memorandum
    (World Bank, Washington, DC, 2020-11-02) World Bank
    Guinea-Bissau’s massive economic potential has not so far translated into better livelihoods for its population. Growth per capita has averaged less than 1 percent per year over 2000-2019. This chapter provides an in-depth analysis of the factors behind the economic stagnation. An interplay of three constraints have impeded sustained high growth. First, the low and volatile growth performance is linked to fragility and political instability, which, together with a poorly diversified economy, with raw cashew nuts accounting for 95-98 percent of export earnings, help explain the stop-go growth cycle. Second, human capital accumulation remains low. An acute shortage of a skilled workforce is a major constraint to inclusive growth. The education system is marked by alarmingly low levels of learning. Third, private investment is particularly low—the second lowest in Africa. Years of underinvestment in infrastructure, energy, and human capital are holding the country back from achieving strong, enduring and inclusive growth. The chapter concludes by highlighting how the COVID-19 crisis exacerbates these constraints and discusses areas that could support sustainable growth. The chapter is organized as follows: section 1.1 presents a brief overview of the political and social context. Section 1.2 puts recent growth into historical and comparative perspective. Section 1.3 presents analysis that helps explain the low-growth trap and identifies possible areas that Guinea-Bissau could pursue to escape this trap. Finally, Section 1.4 discusses the economic impact of COVID-19 and potential pathways to recovery.
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    Vibrant Vietnam: Forging the Foundation of a High-Income Economy
    (World Bank, Hanoi, 2020-05) World Bank Group
    Vietnam’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.
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    Kyrgyz Republic Country Economic Memorandum
    (World Bank, Washington, DC, 2020-03-26) Izvorski, Ivailo ; Mbowe, Appolenia ; Dubashov, Bakyt ; Gassner, Katharina ; Ferrantino, Michael J. ; Islam, Roumeen ; Sahovic, Tarik ; Izvorski, Ivailo
    The Kyrgyz Republic has experienced modest and volatile economic expansion since the economy bottomed out from the transition recession in 1995, when GDP amounted to about half of its pre-independence levels. As a result of structural reforms at the start of transition, the emergence of remittances and commodity exports, largely gold, as powerful new drivers of growth, and improvements in the macroeconomic management in the recent decade, per-capita real GDP grew by 3.1 percent a year on average since 1995. The Kyrgyz Republic is now a lower middle-income economy, as it was in 1990. Economic expansion has benefitted from fixed investment that has risen to 31 percent of GDP, one of the highest in Europe and Central Asia and well-above the threshold of 25 percent reached by the group of successful countries studied by the Growth Commission in 2007. Lower fiscal deficits and low inflation indicate the success of recent macroeconomic policies. These achievements notwithstanding, Kyrgyz Republic’s growth and productivity performance has lagged most relevant comparators, frustrating the needs of the poor and the young. As a result, while per-capita GDP in constant prices has doubled since 1995, it has still not caught up with pre-independence levels. Per-capita incomes in the Kyrgyz Republic have increased by 20 percent less than the average of lower middle-income countries since 2000 and 40 percent less than the average for the Caucasus and Central Asia. Productivity increases – proxied by changes in total factor productivity, have averaged half a percent since 2000, leaving largely factor accumulation as the driver of economic growth. And while ‘Productivity isn’t everything, but in the long run it is almost everything’, highlighting one of the main challenges of the country’s current growth model.3 Poverty has declined, but modest growth has made a modest dent, leaving the poverty rate as high as 31 percent, with a substantial part of the population living in regions with more limited and lower quality government services than in Bishkek.
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    Madagascar Country Economic Memorandum: Scaling Success - Building a Resilient Economy
    (World Bank, Washington, DC, 2020-02) World Bank Group
    Madagascar 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.
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    Tajikistan Country Economic Memorandum: Nurturing Tajikistan’s Growth Potential
    (World Bank, Washington, DC, 2019-05) World Bank Group
    This 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.
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    Kazakhstan Reversing Productivity Stagnation: Country Economic Memorandum
    (World Bank, Washington, DC, 2019) World Bank
    After experiencing exceptional economic growth in the 2000s, Kazakhstan’s economy has slowed sharply since the global financial crisis, putting development achievements at risk. The economic slowdown has been caused by sharply lower commodity prices, and structural degradation of the economy. Kazakhstan’s productivity growth has steadily fallen over the past two decades. Falling within-sector productivity improvements are the driving force behind Kazakhstan’s productivity slowdown. The private sector is significantly constrained and does not exhibit many important features of healthy private sectors worldwide. Empirical evidence suggests that business entry rates are relatively low in Kazakhstan, even controlling for the structure of economy. The evidence shows that new (and small) firms are more productive than older (and larger) firms. The corrosive patterns must be corrected to revive productivity, which is essential for higher economic growth - since higher investment cannot substitute for productivity growth in the long run. The first policy imperative is to level the playing field for all firms - well-connected or otherwise. The second policy is to strengthen the rule of law and to deal more aggressively and comprehensively with corruption. Third, the governments will need to introduce structural changes in the economy to boost private investment and reduce a disproportionately large role of the state in the economy.
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    Cameroon Country Economic Memorandum: Markets, Public Administration, and Growth
    (World Bank, Washington, DC, 2016-12) World Bank
    To become an upper-middle income country by 2035, as targeted in its Vision 2035 document, Cameroon will have to increase productivity and unleash the potential of its private sector. Specifically, Cameroon’s real GDP must grow by around 8 percent and 5.7 percent in per capita terms over 2015–2035, which in turn will require the investment share of GDP to increase from around 20 percent of GDP in 2015 to 30 percent of GDP in 2035 and productivity growth to reach 2 percent over the same period, from its average rate of zero growth over the past decade. These are daunting yet doable challenges. To make it happen the public sector would need to reinvent itself and change its nature: reduce distortion, promote innovation and increase allocative efficiency; and more competitive markets would be needed to promote productivity gains. Based on the rigorous analysis of the Cameroonian economy using five main sources of data,1 the report will address the following topics: Chapter 1 analyzes constraints to growth, Chapter 2 explores constraints to enhance competitiveness, Chapter 3 examines the role played by the Cameroonian state on these constraints, and Chapter 4 derives from these analyses a set of actionable policy recommendations. The abstract contains the following structure: 1. Underpinnings of Cameroonian economy affecting growth potential 2. Recommendations on nine major areas of collaboration between the government and the private sector.