Country Economic Memorandum

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Ethiopia’s Great Transition: The Next Mile - A Country Economic Memorandum

(Washington, DC : World Bank, 2022-06-17) World Bank

Ethiopia’s rapid growth over the past two decades has resulted in a surge in income per capita levels, with the country approaching fast the middle-income milestone. Over the past decade, fast growth was driven by capital accumulation, but the extent to which this growth has been equally distributed is unclear. Public infrastructure spending accelerated dramatically in the first half of the 2010s, helping underpin fast economic growth. However, this approach seems to have had important shortcomings. Contrary to the findings of World Bank (2015) which examined an earlier period, total factor productivity (TFP) declined during 2011-2020, contributing negatively to growth. In addition, inequality at the household level increased between 2011 and 2016. Finally, macroeconomic imbalances have widened, a trend exacerbated by recent shocks. This report discusses the drivers of growth in Ethiopia and, in the absence of official subnational gross domestic product (GDP) figures, examines whether there has been convergence in economic activity at the subnational level.
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 Group

This 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.
Ghana Rising: Accelerating Economic Transformation and Creating Jobs

(World Bank, Washington, DC, 2021-11-10) World Bank

Ghana has been a rising growth star and a beacon of hope in West Africa. Strong economic growth over the past two decades led to a near doubling of GDP per capita, lifting the country through the threshold for middle-income status in 2011. GDP per capita grew by an average of 3 percent per year over the past two decades, putting Ghana in the top ten fastest growing countries in Sub-Saharan Africa (SSA). A rising tide has tended to lift all boats. Poverty rates more than halved between 1998 and 2016, and the extreme poverty rate declined from 36.0 percent in 1991 to 8.2 percent in 2016. The net primary school enrollment rate rose from 62.5 percent in 2000 to 86.0 percent in 2019. This progress has motivated the government’s goal to lift the country to high-income status by 2057. The focus of this Country Economic Memorandum (CEM) is to review options for Ghana to create enough higher quality jobs through economic transformation. Economic transformation, or inclusive productivity growth, occurs as people and resources shift from lower to higher productivity activities. It raises household incomes and living standards, thereby lifting people out of poverty. It can be achieved through the movement of workers and other resources between firms and sectors, or through workers staying within existing firms that benefit from within-firm productivity growth by adopting better technologies and capabilities.
Lake Chad Regional Economic Memorandum: Technical Paper 1. Socioeconomic Trends in the Lake Chad Region

(World Bank, Washington, DC, 2021-11-09) Masaki, Takaaki ; Rodríguez-Castelán, Carlos

The Lake Chad region, which is an economically-and socially integrated area spanning across four countries of Chad, Cameroon, Niger, and Nigeria in north-west Africa, has been trapped in a vicious circle of suboptimal territorial development and fragility. This note shows that the Lake Chad region lags in multiple dimensions of development ranging from poverty, human capital, and access to services. A poverty rate in the Lake Chad region is found to be much higher than other parts of the countries surrounding the lake. The regional poverty rate in the Extreme North region of Cameroon (59 percent) is three times higher that of the rest of the country (19 percent). In Nigeria, the Lake Chad region203 has a poverty rate (72 percent) nearly twice as high as in the rest of the country (38 percent). Chad is the only exception, where the poverty rate in the country’s Lake Chad region (31 percent) is lower than the rest of the country (40 percent).204 This is explained by the fact that the Chad region around the lake lies near the capital of the country, with a consequently higher urbanization rate and a relatively high population density. The note is organized as follows. Section 2.2 provides key statistics on poverty, sector of work, and human capital indicators in the Lake Chad region vis-à-vis other parts of the country and examine how the Lake Chad lags behind in different dimensions. Section 2.3 provides a diagnostic of economic geography with a focus on three dimensions of density, distance and division. Section 2.4 identifies a set of structural factors, aggregate shocks and selected policies that might be associated with the dynamics of economic activity and social inclusion across the region.
Somalia Country Economic Memorandum: Towards an Inclusive Jobs Agenda

(World Bank, Washington, DC, 2021-07-01) World Bank

Somalia has a triple challenge of low levels of labor force participation, low productivity, and high levels of poverty. Economic growth in Somalia has been low, subject to shocks; and thus, insufficient for job creation. Shocks to the economy have contributed to forced displacement, a dominance of jobs outside of agriculture, and rapid urbanization. The Somali economy is largely driven by consumption and supported by external financial flows. In Somalia’s state-building context, enhancing political stability and developing a social contract is fundamental for growth. The objective of the Somalia Country Economic Memorandum (CEM) is to inform the economic policy dialogue and broader debate in Somalia regarding the types of reforms required to stimulate growth and job creation. The Somalia CEM applies and adapts the Jobs and Economic Transformation (JET) Framework. The JET framework has two pillars, one which considers job-creating private investments, and the second that concerns building the capabilities of workers. In the Somali context, efforts have been made to incorporate a gender and inclusion lens, given the particularly low levels of female labor force participation. The report has two special focus chapters on trade and integration and entrepreneurship, due to their importance to growth and jobs in the Somali economy. However, a detailed value chain analysis goes beyond the scope of this report. The report utilizes available quantitative data, primary research conducted for the study, and builds on earlier work. The report considers both the structure of today’s economy and the source of jobs, as well as potential future drivers of growth.
Republic of the Marshall Islands Country Economic Memorandum and Public Expenditure Review: Maximizing Opportunities, Enhancing Sustainability

(World Bank, Washington, DC, 2021-06-20) World Bank

This joint Country Economic Memorandum (CEM) and Public Expenditure Review (PER) aims to support the Government of the Republic of the Marshall Islands (GoRMI) to identify a prioritized and sequenced set of reforms to drive increased economic growth, resilience, and fiscal sustainability. The study has two objectives. First, to improve understanding of the challenges, opportunities, and risks to achieving sustainable economic growth and job creation in the Republic of the Marshall Islands (RMI). Second, to improve the management of public resources to support long-term economic development, fiscal sustainability, and service delivery. The assessment aims to balance the need for reform to drive higher prosperity and resilience with GoRMI’s limited capacity to design and implement reforms and provide public goods and services. The reform priorities identified are also consistent with the RMI’s National Strategic Plan 2020-30, which articulates the nation’s vision to build a resilient, productive, and self-supportive RMI. This Executive Summary is structured in three sections. The first section provides a brief background to RMI and the structure of the economy. The second section summarizes the key issues and challenges to achieving GoRMI’s long-term development objectives under five themes: (i) the management of public finances; (ii) public service delivery; (iii) the fisheries sector; (iv) the labor market and labor mobility; and (v) disaster resilience and climate change. The final section outlines key recommendations under the same five themes.
Côte d’Ivoire - Country Economic Memorandum: Sustaining the Growth Acceleration

(Washington, DC, 2021-04) World Bank

The Ivorian economy needs to sustain its growth momentum. During the last decade, Côte d’Ivoire’s growth performance has been impressive. To achieve its ambitious goal of reaching emerging market status within one or two generations, however, it needs to maintain the strong growth for many years to come. Fewer than 15 countries have managed to sustain high growth for over 25 years in the postwar period, and their experience has shown that increasing productivity is at the heart of it. To follow in their footsteps, Ivorian growth also needs to be more inclusive and reduce structural imbalances, including the gap between the economic capital, Abidjan, and the rest of the country. This report addresses this question.
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.
Iraq Economic Monitor, Spring 2020: Navigating the Perfect Storm (Redux)

(World Bank, Washington, DC, 2020-05-04) World Bank

Iraq, once again, is facing a combination of acute shocks which the country is ill-prepared tomanage. The collapse in oil prices has considerably reduced budgetary revenues and reversed the fiscal surpluses accumulated since 2018. COVID-19, and the lockdown measures needed to contain the pandemic have dealt a severe blow to economic activities especially the services sectors like transport, trade, banking and religious tourism, which constitute around half of the non-oil economy. The growing discontent over poor service delivery, rising corruption, and lack of jobs persists and is coupled with political impasse over the formation of a new government. Iraq's pre-existing conditions going into this crisis limit its ability to manage and mitigate the socio-economic impact. A large dependency on oil revenues coupled with built-up budget rigiditieslimit Iraq's fiscal space to respond to the COVID-19 outbreak and offer a stimulus package to re-start the economy. An undiversified economy, highly dependent on oil outcomes, as well as large presence of the state in economic and commercial activities, make it hard to create the needed private sector jobs for a predominantly young population. Furthermore, rampant corruption and weak governance and service delivery fueled large scale protests across the country calling for better public service delivery and jobs. As a result, all signs indicate that this multifaceted crisis will have a protracted impact. The outlook for Iraq, which was already negative prior to the COVID-19 shock, has markedly worsened since. Near-term economic growth will be subdued by low oil prices, a new OPEC agreement that has reduced oil production quotas, and unfavorable global and domestic conditions including disruptions from COVID-19 spread. As a result, the economy is projected to contract by 9.7 percent in 2020, down from a real GDP growth of 4.4 percent in 2019, with both oil and non-oil sectors contracting by 13 and 4.4 percent respectively. This special focus on digital economy (DE) highlights the importance of digital transformation for Iraq and the urgency behind it. Iraq's economic condition was gradually improving following the deep economic strains of the last three years. However, the recent protests and unrest highlight the continued fragility of the country and the high priority of improving economic opportunities, particularly for youth. Leveraging the DE will help Iraq address some of its citizens' concerns as well as accelerate the achievement of its development objectives.
Mauritania Country Economic Memorandum: Accelerating Growth Through Diversification and Productive Cities

(World Bank, Washington, DC, 2020-05) World Bank

The Mauritanian economy is at an important crossroad. Despite significant increases in itsnatural resource wealth, economic development in Mauritania remains weak. The over-reliance on natural resources has left the economy undiversified with growth, exports, and fiscal revenues all dependent on extractives. Responding to the 2015 commodity price shock, the authorities implemented a strong fiscal consolidation program that restored macroeconomic stability andsteered the economy onto a recovery path. The new administration—appointed following the election in mid-2019—now has the challenge and opportunity to map out a more sustainable development model and steer the economy onto a path of accelerated and equitable economic growth for the rapidly growing population. The objective of this report is to support policy makers in Mauritania in their reform efforts to accelerate growth as outlined in the National Development Plan (SCAPP).It attempts to answer the following questions: (i) Why Mauritania could not diversify its economy in the past and what are the opportunities to do so in the future? (ii) What are the reasons behind the weak link between urbanization and growth, and is Nouakchott lifting its weight as anurban agglomeration? (iii) Which policy actions could help build those pathways? By answering these questions, the report aims to contribute to the economic discussion and provide policy recommendations for the choices that Mauritania is facing to accelerate growth and improve theliving standards of its population. The report is organized around five chapters. Chapter 1starts with a brief introduction. Chapter 2 analyzes the key characteristics of Mauritania’s past growth performance. Chapter 3 evaluates the current and future potential for economic and export diversification. Chapter 4 examines the challenges that are preventing urbanization from contributing to growth, with a focus on Nouakchott. Chapter 5 concludes by proposing a menu of policy recommendations that could help Mauritania achieve faster and more sustainable economic growth.