Country Economic Memorandum
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Publication
Guinea-Bissau Country Economic Memorandum : Terra Ranca! A Fresh Start
(Washington, DC, 2015-01-12)After decades of turmoil and instability, a period of calm and progress evolved in Guinea-Bissau in 2009. A military coup in April 2012 interrupted it. A fresh start is needed to alter the dynamics that kept Guinea-Bissau poor. In 2013, Gross National Income per capita was US$590. Average economic growth barely kept pace with population growth. In 2010, poverty at the national poverty line of US$2 a day was 70 percent; extreme poverty at US$1 a day was 33 percent. These numbers have increased from their 2002 levels and they are estimated to have increased further since 2010. It is time to make a fresh start and turn the page on anemic growth and poverty. Guinea-Bissau s elections of May and June 2014 are described by many observers as the freest and fairest in the country s history. Voter registration and turnout were at record-levels. The conditions for progress and stability are favorable. Guinea-Bissau is a rural economy, almost entirely dependent on a single cash crop: cashew. It is the main source of income for most of the country s poor. Cashew nuts are Guinea-Bissau s main export, accounting for 85 to 90 percent of the country s total exports. The balance of payments is dominated by cashew, on the export side, and food and fuel, among imports. The economy is open, with exports and imports by land and sea amounting to more than 70 percent of GDP. Shocks to cashew, rice and oil prices have a considerable effect on the current account balance. Official Development Assistance (ODA) makes a critical contribution to supporting the state budget. In 2011, Guinea-Bissau ranked 20th among the world s most aid dependent countries. Recently, policy mistakes aggravated an already dire situation. However, the 2014 cashew campaign was been better than the 2013 campaign, and the prospects for a pick-up in growth have improved. -
Publication
Georgia : Seizing the Opportunity to Prosper
(Washington, DC, 2014-12)Georgia: Seizing the Opportunity to Prosper suggests a path towards sustainable and shared growth. Georgia s story is associated with three stylized facts: high growth with persistent unemployment currently at nearly 15 percent after 10 years of annual growth that averaged above 5.5 percent; a doing business rank of 8 out of 189 countries achieved without recovery to 1990 levels of per capita income suggesting a relatively difficult transition experience in spite of noteworthy success with several governance and business environment reforms; and obstinate socio-economic vulnerabilities reflected in Georgia s status as one of the poorest countries in the Europe and Central Asia (ECA) region of the World Bank with a relatively weak performance on reducing poverty and inequality. Georgia is well positioned to achieve its development objectives. The main challenge is persistent joblessness, which must be addressed to establish a sustainable basis for the pro-poor development model outlined in the Government s Socio-Economic Strategy 2020. This report, which is anchored in the Government s Socio-economic Development Strategy 2020, explores the potential for improved export competitiveness to strengthen employment growth in Georgia and is intended to inform a policy agenda mainly focused on the demand side of the labor market. -
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Trading Up to High Income : Turkey Country Economic Memorandum
(Washington, DC, 2014-05-05)Turkish exporters substantially broadened market reach, exporting to 137 countries at present, up from 90 in 2000. Turkey's global market share rose substantially from 0.55 percent of global imports in 2002 to 0.82 percent in 2012. Turkey aims to become one of the ten largest economies in the world by 2023, with per-capita gross domestic product (GDP) rising to United States (U.S.) $25,000 and exports to U.S. 500 billion dollars. This report focuses on Turkey's competitiveness from the supply side, but it is important to note that ensuring a more balanced mix of financing for the required investment through measures to boost domestic savings is equally important if Turkey's progress is to be sustained. Achieving Turkey's export target is possible and it will likely require a larger global market share. The relatively low level of foreign direct investment (FDI) in Turkish manufacturing has been a constraint to export growth and quality improvements. Raising export growth to levels that help meet Turkey's development goals will require a policy agenda that targets sustained further improvements in Turkey's physical, human, and institutional capital. This report prioritizes broader policies that are fundamental for Turkey to export its way out of middle-income. Chief among these are policies that: (i) link the country further with international markets, including by helping bring larger inflows of FDI, particularly into the manufacturing sector; (ii) promote innovation, including by encouraging a large role for private companies in research and development (R and D); (iii) upgrade the skills both of the existing work force and new entrants; and (iv) improve access to finance, particularly long-term, with a view to unlock the potential of the dynamic small and medium enterprise (SME) sector. -
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Pakistan : Finding the Path to Job-Enhancing Growth
(Islamabad: World Bank, 2013-08)Pakistan's rebound from the global financial crisis has been slow and fragile, and unless the economy changes course swiftly, it could face its second balance of payments crisis in five years. Its recovery from the 2008-09 global financial crisis has been the weakest in South Asia, with a double dip pattern. This report identifies conditions for a sustainable job-enhancing growth agenda for Pakistan. Policy must target both goals as they are closely intertwined. Higher growth rates can be achieved through productivity improvements (technology, innovation, better economic governance), but also from higher output extracted from factors-physical capital, labor, human capital, and land. This report considers whether Pakistan should pursue historical growth of 4.3 percent a year, supported by piecemeal structural reforms leading to partial and unsatisfactory outcomes-or rapid growth of 7 percent, requiring comprehensive big-bang reforms. The report is organized around three major themes: (i) the stylized facts, what are the pluses and minuses of Pakistan's patterns of growth and job creation? (ii) the diagnostics, what is holding back Pakistan's growth? And (iii) the transformational agenda, what are the core ingredients of job-enhancing growth? And how can analysis of the political economy identify policy tradeoffs? -
Publication
Georgia Rising : Sustaining Rapid Economic Growth
(Washington, DC, 2013-07)Economic growth in Georgia was strong at 6.1 percent per year during 2004-12 as structural reforms and a favorable global economy led to large foreign direct investment (FDI) inflows and expansion in the services sectors. However, the current account deficit has remained large and economic expansion has been driven primarily by the nontradable sectors, thus raising concerns about the sustainability of growth. This country economic memorandum (CEM) report shows that sustaining strong growth in Georgia going forward will require new policies that help support both high investment financed increasingly from domestic sources as well as sustained rapid productivity growth in the export and tradable sectors. The report presents an array of policy options to raise national saving, boost firm productivity, better deploy labor resources, and enhance export competitiveness. Raising national saving will require a shift in the fiscal framework to control growth of current expenditures and bolstering private saving through macro-prudential regulations and a package of measures to support saving for retirement. Stimulating firm productivity will require addressing a range of constraints, including streamlining the complexity of closing a business, reducing high borrowing costs, and improving the electricity pricing mechanism. Boosting job creation and more productively deploying labor resources will require upgrading overall education quality, strengthening vocational education systems, and developing job matching services to alleviate skills mismatches and reduce search costs. Enhancing competitiveness of exports will require addressing any overvaluation of the exchange rate, pursuing trade-related reforms to enhance access to European Union and international markets, and upgrading logistics and internal infrastructure. -
Publication
Georgia Sustaining Rapid Economic Growth : Country Economic Memorandum
(Washington, DC, 2013-07)Sustaining rapid economic growth for reduced poverty and shared prosperity over the next decade and beyond in Georgia is an important goal and a key challenge for the authorities. While the record of growth over the last decade has been strong, the forces that drove this growth are unlikely to be sustained in the coming years. Sustaining strong growth in Georgia going forward will require new policies that help support both high investment financed increasingly from domestic sources as well as sustained rapid productivity growth in the tradable sectors. Ensuring a more sustainable source of financing for investment and accumulation will require raising low rates of national savings in Georgia. Sustaining rapid productivity growth of tradables will require reforms to address firm level constraints to improved allocative efficiency and productivity over the firm lifecycle. Supporting productivity growth will also require improved skills and deployment of workers that will also support employment generation and more inclusive growth going forward. Expanding productivity and growth of exports will require ensuring price competitiveness, enhancing market access, and improving logistics infrastructure. This report is structured in five chapters. Chapter one looks at the sources and prospects for growth, the record on national savings, and the prospects for raising savings. Chapter two is a diagnostic of the dynamics of firm-level productivity growth and the policies that may be constraining improved allocative efficiency and lifecycle productivity. Chapter three looks at employment and skills to assess whether Georgia's labor resources are adequately deployed. Chapter four is a diagnostic of exports and international trade and the policies that may be holding back growth and productivity of the export and tradable sectors in particular. Two appendices on the apparel and wine industries provide additional insight into policies to support export growth. -
Publication
Reviving Romania's Growth and Convergence Challenges and Opportunities : A Country Economic Memorandum
(Washington, DC, 2013-06-21)This Country Economic Memorandum (CEM) sets a framework for a dialogue on inclusive economic growth and income convergence in Romania. Generous Foreign Direct Investment (FDI) and other financial inflows lifted consumer demand, built up key industries, modernized wholesale trade and unleashed the movement of labor from low-productivity activities like agriculture towards high-productivity activities like manufacturing. Public and private investments in education lifted tertiary education enrollment from 12 to 23 percent. Preliminary calculations suggest that this growth was shared even after the crisis, as the income of the bottom 40 percent of the population grew by 5.5 percent on average during the 2000-2011 periods, a pace slightly above the 4.8 percent growth in the income of all households and the 4.1 percent average growth. Achievements notwithstanding, there is little room for complacency. The report discusses the immediate constraints to economic growth in areas where the short-term pay-off is high rather than covering all potential sources of growth for Romania. Although these are only the initial steps to reignite growth, the challenges of addressing each of these constraints should not be underestimated. Tackling them effectively demands a strong strategic vision, meticulous planning, and policy coordination. A significant amount of strategic communication of the benefits of the outlined reforms for the country will also be required since the roadblock to shaping and implementing these policies is likely to be vested interests, institutional inertia and lack of political consensus. In short, the crisis revealed the weakness of Romania's past growth model: it was based to a large extent on consumption and short-term capital inflows rather than on sustained productivity increases in tradable sectors and it concealed significant inefficiencies in the public sector. -
Publication
Beyond Oil : Kazakhstan's Path to Greater Prosperity through Diversifying, Volume 2. Main Report
(Washington, DC, 2013-06)Kazakhstan aspires to become one of the world s 30 most developed economies by 2050. The focus is on laying the basis for the accelerated diversification of the economy through industrialization and infrastructure development, including enhancing human capital to drive innovation and economic efficiency. This country economic memorandum report adopts an analytical framework that looks into options that will be explored to help authorities think about diversification across three sectors: diversification of products and services; diversification of economic partners; and diversification of endowments. Five chapters structure this report, outlining the weaknesses and strengths of the Kazakh economy that will need to be addressed for increased prosperity. Chapter 1 discusses Kazakhstan s natural resources and how important it is to focus on the policies that matter for development and diversification. Chapter 2 focuses on export concentration and assesses whether resource dependence leads to macroeconomic volatility, whether Kazakhstan has been able to avoid volatility, and what macro-policy solutions are available to Kazakhstan. Chapter 3 looks at the structure of employment in the country and assesses whether Kazakh workers have the skills demanded by the market. Chapter 4 analyzes the regulatory environment and how well market institutions have developed to strengthen the quality of institutions. Chapter 5 uses the product space analysis to assess where Kazakhstan s comparative advantages are. It then discusses whether the country has faced excessive trade barriers, whether there is a role for industrial policy, and what will be done in the short term to help diversification. -
Publication
Beyond Oil : Kazakhstan's Path to Greater Prosperity through Diversifying, Volume 1. Overview
(Washington, DC, 2013-06)Kazakhstan aspires to become one of the world s 30 most developed economies by 2050. The focus is on laying the basis for the accelerated diversification of the economy through industrialization and infrastructure development, including enhancing human capital to drive innovation and economic efficiency. This country economic memorandum report adopts an analytical framework that looks into options that will be explored to help authorities think about diversification across three sectors: diversification of products and services; diversification of economic partners; and diversification of endowments. Five chapters structure this report, outlining the weaknesses and strengths of the Kazakh economy that will need to be addressed for increased prosperity. Chapter 1 discusses Kazakhstan s natural resources and how important it is to focus on the policies that matter for development and diversification. Chapter 2 focuses on export concentration and assesses whether resource dependence leads to macroeconomic volatility, whether Kazakhstan has been able to avoid volatility, and what macro-policy solutions are available to Kazakhstan. Chapter 3 looks at the structure of employment in the country and assesses whether Kazakh workers have the skills demanded by the market. Chapter 4 analyzes the regulatory environment and how well market institutions have developed to strengthen the quality of institutions. Chapter 5 uses the product space analysis to assess where Kazakhstan s comparative advantages are. It then discusses whether the country has faced excessive trade barriers, whether there is a role for industrial policy, and what will be done in the short term to help diversification. -
Publication
Republic of Armenia : Accumulation, Competition, and Connectivity
(Washington, DC, 2013-04)By 2013, the Armenian economy has left behind most of the hangover from the global financial crisis and a look at medium-to long-term growth drivers is therefore in order. Real Gross Domestic Product (GDP) growth reached 7.2 percent in 2012, and the current account deficit narrowed, although it remained high. Macroeconomic buffers have been rebuilt to some extent, although the public debt-to-GDP ratio, at 44 percent, remains too high to relax fiscal restraints. The central tenet of this report is that the government's job creation agenda requires a different growth model than the one followed before the global crisis. Reaching the goals of the government's strategy will require a combination of four factors: 1) higher investment and better financial intermediation between savers and investors; 2) better utilization of the labor force, including the largely untapped resource of Armenians abroad; 3) stronger competitive pressures in the markets for goods and services, which will improve incentives for companies to innovate, adopt new technologies, and become more efficient; and 4) enhanced connections of the landlocked Armenian economy with world markets, including through land, air, and through internet and communication technologies. This report's theoretical framework emphasizes structural reforms to drive growth. Economic growth theory distinguishes between accumulation of the factors of production and enhancing the productivity with which these factors are employed.