Country Economic Memorandum

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Guinea-Bissau Country Economic Memorandum : Terra Ranca! A Fresh Start, Summary
(Washington, DC, 2015-01-12) World Bank
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.
Tanzania : Productive Jobs Wanted
(Washington, DC, 2014-09) World Bank Group
Over the past 18 months, the World Bank has been working on a comprehensive plan to address the challenge of productive jobs in Tanzania. This study represents a step towards a better understanding of how to promote job creation in Tanzania. Indeed, the growth of productive jobs is vital for alleviating poverty and promoting shared prosperity - two important goals of Tanzania's economic strategy. This booklet highlights the three-pillar plan for job creation derived from the Tanzania country economic memorandum. The first pillar looks at job creation from the angle of small non-farm businesses, which have been growing very fast during the rapid urbanization. The second pillar focuses on farms because those still capture the largest share of employment in Tanzania, while the third pillar discusses the job-creation potential associated with business expansion into new markets. By focusing on a comprehensive set of concrete actions, the goal is to stimulate debate as well as to build ownership and accountability among policy-makers and key stakeholders in the country.
Reviving Romania's Growth and Convergence Challenges and Opportunities : A Country Economic Memorandum
(Washington, DC, 2013-06-21) World Bank
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.
Beyond Oil : Kazakhstan's Path to Greater Prosperity through Diversifying, Volume 1. Overview
(Washington, DC, 2013-06) World Bank
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.
Beyond Oil : Kazakhstan's Path to Greater Prosperity through Diversifying, Volume 2. Main Report
(Washington, DC, 2013-06) World Bank
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.
Belarus Country Economic Memorandum : Eeconomic Transformation for Growth
(Washington, DC, 2012-04-05) World Bank
The last decade in Belarus was marked by an average economic growth rate of close to 8 percent annually and an impressive eight-fold reduction in poverty. Economic growth was initially driven by external factors, but after 2005 expansionary domestic demand became the prevalent contributor to growth. Growth was backed by large state support to the economy, sizeable public investments, and huge expansion of credit, particularly under government directed lending programs. Simultaneously, the external balance shifted from a surplus of 1.4 percent of growth development product (GDP) in 2005 to a deficit of 15.0 percent of GDP in 2010. Throughout the period 2001-10, the economic model relied on underpriced energy resources from Russia, with an annual average size of the imputed subsidy of over 13 percent of GDP. However, the existing growth model has reached its limits and cannot ensure growth sustainability without structural reforms. Going forward, the growth model will have to rely on significant productivity gains driven by structural reforms in an environment of macroeconomic stability. Macroeconomic adjustment which effectively combats the sources of external imbalances in Belarus is a critical and necessary, but insufficient condition for achieving sustainable economic growth in the medium term. The Belarusian economy is facing formidable challenges beyond the macroeconomic issue of adequately financing its external imbalances: (1) how to reallocate labor and capital to high productivity segments of the economy; (2) how to restructure the state-owned enterprise sector; and (3) how to support the underdeveloped private sector and the services sector. By successfully overcoming these challenges, Belarus will revive its competitive segments of the economy and discover untapped opportunities for growth. It will also diminish its economic dependence on underpriced energy from Russia and move up the value chain in global integration. With valuable geographical location and an educated and disciplined labor force, Belarus can restructure its economy, diversify its exports, and increase the prosperity of its people.
Turkey - Country Economic Memorandum : Sustaining High Growth, Selected Issues, Volume 1. Main Report
(Washington, DC, 2008-04) World Bank
This Country Economic Memorandum (CEM), prepared in collaboration with the Turkish authorities, summarizes recent accomplishments in achieving high growth and analyzes remaining public policy challenges and options available to the authorities to meet these challenges. The country seeks to double the nominal per capita income of its population by 2013. It wants this rapid growth to be inclusive of all segments of society, regions, and economic sectors-especially through improved labor market performance leading to more and better jobs in the economy. At the same time, the authorities want to improve the quality of public services which they see as an important complement to economic growth in improving quality of life. They also believe that the potentially negative environmental consequences of the period of rapid growth ahead need to be managed so that the positive welfare gains from higher per capita income levels do not become eroded by environmental nuisances. Turkey has succeeded in restoring macroeconomic stability and rapid growth, it has been recovering from crisis in 2001 and grew at 7.5 percent per year on average during 2002-2006. In addition, certain dimensions of public sector governance are instrumental in improving quality of life and promoting competitiveness in Turkey including, for example, food safety and environmental protection. Further strengthening of the legal framework and institutions fighting corruption could improve the investment climate, the efficiency of the public sector, and popular support to further reforms, and continuous macroeconomic stability is a necessary (but not sufficient) condition for sustainable growth. Strong fiscal discipline and monetary policy have reduced chronic inflation to below 10 percent in 2005. Public debt has also been reduced and its sustainability has improved. Accordingly, the resilience of the Turkish economy to shocks has improved as demonstrated by the rapid recovery from turmoil in international markets in the summer of 2006 and, more recently, in the summer-autumn of 2007.
Albania - Sustaining Growth Beyond the Transition : A World Bank Country Economic Memorandum
(Washington, DC, 2004-12-27) World Bank
While Albania 's performance has been impressive, there are concerns about the sustainability of high rates of economic growth in the future. The evidence from the growth accounting exercise indicates that total factor productivity growth from post-transition reallocation is gradually coming to an end. At the same time, the contribution of capital accumulation has only picked up modestly. This suggests that in order to sustain high GDP growth going forward, Albania must seek to raise its investment and, secondary school enrollment rates, increase the degree of trade integration, and improve institutional quality (governance). Worryingly, total factor productivity growth has slowed significantly in recent years while the contribution of factor accumulation was negligible. Neither remittances nor earnings from illegal activities constitute a solid basis for long-term economic development. There are signs, already, of a decelerating trend in the level of remittances. Furthermore, there are concerns about the financing of the country's investment needs over the medium term. The likelihood that Albania's access to concessional financing sources will decline, as well as expectations for dwindling external support and inflows from abroad, presents major risk factors that must be mitigated with the help of the donor community.
Serbia and Montenegro : An Agenda for Economic Growth and Employment
(Washington, DC, 2004-12-06) World Bank
Upon resumption of its transition to a market economy in late-2000, Serbia made good initial progress across a range of areas. This progress began from a very difficult starting point which reflected the legacy of a decade of isolation, conflict, and poor economic management. However, deep structural weaknesses remain. Growth rates of around 4 percent per year will not suffice to produce a rapid convergence of living standards towards historical levels. Moreover, the positive elements of Serbia's recent performance are not sustainable without further adjustment and sustained reform. This report analyzes Serbia's recent performance and near-term reform priorities, in five areas which are particularly important for growth and employment creation. Eight themes emerge as the key reform priorities for enhancing growth and employment generation in Serbia: enhanced political stability and improved governance are key prerequisites for sustained growth; reduction of the public sector, thus reducing spending and fiscal burdens; promotion of export development, addressing the anti-export bias, through adequate institutional framework, tariff reform, and a strong trade policy; completion of enterprises and banks privatization; enhanced financial discipline and competitiveness; enabling an improved business environment; foster an enhanced, flexible formal labor market; enhance quality of, and access to education and training. The report demonstrates in great detail the outlined package of substantial and permanent fiscal adjustment, and sustained progress in structural reform, in order to generate the higher investment rates and a more competitive economy which can prod sustainable growth, and improved living standards over the medium-term. Such policies need to be implemented with urgency and unwavering commitment.
Zambia - Country Economic Memorandum : Policies for Growth and Diversification, Volume 2. Annexes
(Washington, DC, 2004-10-20) World Bank
In October 1991 Zambia moved to a multiparty democratic system. In the following years, the government implemented a number of policy and structural reforms, liberalizing exchange and interest rates, simplifying the tariff structure, and removing quantitative restrictions on trade, privatizing most state-owned enterprises, and substantially withdrawing from the agriculture sector. Despite these reforms, economic growth has remained lackluster, and poverty and social conditions have worsened. There are however, hopeful signs that increased growth and poverty reduction are within reach in Zambia. The country's economy has long been tied to the copper industry, whose purchasing power has been in decline for decades. But declining copper prices were not the only reasons Zambia's economic performance declined between 1991 and 2002. Excluding the one-time disruption in real sector activity in 1994-95, real GDP grew at an average annual rate of 3 percent during 1991-2002. The report argues that estimates puts its annual long-term growth potential at about 5 percent, implying per capita income growth of 2.5-3.0 percent a year, and, the reason why its potential is not being achieved, lies in several key problems, namely macroeconomic mismanagement, lack of ownership of reform and poor policy implementation, a weak investment climate, lack of good governance, and, the HIV/AIDS pandemic. And further asserts that central to the lack of macroeconomic stability - in particular to the high inflation and real interest rate - is the lack of fiscal control and commitment to fiscal discipline. Zambia's large external and rising domestic debt, combined with budgetary dependence on external financing, has constrained the government's ability to exert monetary control to achieve macroeconomic stability. The financial sector must become more efficient and capable of supporting private investment and growth. Key institutional and policy issues for immediate attention are creating a mechanism to resolve the debt of failed banks and state-owned non-bank financial institutions; upgrading the human and technological resources of financial system regulators and supervisors; improving access to financial services, in particular rural financial services; and, investing in financial system infrastructure to improve market data, and accounting and auditing standards. The report expands on the country's opportunities in the mining sector, particularly copper, but also on its rich reserves of gemstone minerals, as an opportunity for export diversification; in the manufacturing sector, specifically textiles, garments, and processed foods; and, in tourism development.