Country Economic Memorandum
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Publication
Guinea-Bissau Country Economic Memorandum : Terra Ranca! A Fresh Start, Summary
(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
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
Niger - Accelerating Growth and Achieving the Millennium Development Goals : Diagnosis and the Policy Agenda
(Washington, DC, 2007-09)This report has the following objectives: (i) identify the underlying constraints to strong and sustained growth, in particular, the dynamic circles that lock Niger in a low-growth/high poverty equilibrium; (ii) understand the key determinants of growth and poverty traps and the role increased foreign aid could play to promote growth and help achieve the MillenniumDevelopment Goals (MDGs); and (iii) help the Government of Niger design a strategy to accelerating growth and human development: Strategy Paper for Human Development (SPAHD). This report is organized as follows: Chapter 1 describes the main features of Niger's economy from a Social Accounting Matrix perspective. It aims to analyze the potential linkages between sectors and the impact a policy shock of an increased public investment could have on Niger's economy. Chapter 2 reviews Niger's growth performance over the past three decades. It draws some policy lessons critical to the design of a growth strategy for Niger. Chapter 3 provides a snapshot of where Niger stands in achieving the MDGs with less than a decade remaining. It examines the reasons why Niger is falling short of the goals, describes the recent progress, and highlights the challenges ahead. Chapter 4 analyzes the constraints to strong and sustained growth with particular focus on poverty traps. Chapter 5 discusses the macro and micro foundations for strong growth and achieving the MDGs. It examines the post stabilization macroeconomic policy required to enhance the macroeconomic foundations of growth. It also identifies the engines of growth and highlights the cross-cutting issues for improving the business environment. In addition, the chapter discusses the role the private sector can play in Niger's quest to achieve the MDGs. Chapter 6 analyzes the potential impact that increased foreign aid would have on growth, poverty, and other MDGs using Niger's macroeconomic model. It focuses mainly on the links between foreign aid, the level and composition of public investment - which is disaggregated into education, infrastructure, and health -- the supply-side effects of public capital, growth, poverty, and other MDGs. Furthermore, it discusses the impact of three policy experiments on growth and the MDGs, including an increase in foreign aid (namely grants), debt relief, and a combined increase in foreign aid and tax reforms. Finally, it highlights the importance of improving governance to maximize the impact of domestic reforms and increased foreign aid on growth and the MDGs. Chapter 7 concludes the report and draws up policy recommendations, highlighting the policy priorities needed to accelerate growth and achieve the MDGs. -
Publication
Moldova : Opportunities for Accelerated Growth, A Country Economic Memorandum for the Republic of Moldova
(Washington, DC, 2005-09)This Country Economic Memorandum (CEM) explores how Moldova can confront its emerging challenges to growth, and position itself strategically to take advantage of opportunities, by using its strengths more effectively. The focus of the CEM, therefore, is on the identification of the critical binding constraints to growth that can be addressed through public policy. Sustained economic growth, and increased international competitiveness will require a set of policies which encourages faster gains in labor productivity. The recommendations provided by the CEM focus on improving the macroeconomic supporting environment, enhancing the opportunities presented by the large inflow of workers remittances, creating a more dynamic and diversified private sector - particularly in the agricultural sector - and increasing the effectiveness of the Government. While economic performance has been strong since 2000, the CEM highlights the erosion of several important factors that have driven the recent growth. Unless action is taken to address emerging constraints, the Moldovan economy faces the considerable risk that growth and poverty reduction will be slow, and international competitiveness will erode. To ensure that growth and competitiveness are sustained over the medium term, a number of policy adjustments are necessary. -
Publication
Organization of Eastern Caribbean States : Towards a New Agenda for Growth
(Washington, DC, 2005-04)The Organization of Eastern Caribbean States (OECS) is at an economic crossroads. A secular slowdown in growth, a radical transformation of the external environment, high debt and fiscal imbalances, and persistent unemployment and poverty have combined to create an imperative for redefining the OECS strategy for growth and economic development. The crucial elements of such a strategy are: (1) the formulation of a long-term vision that positions the OECS Economic Union in the global economy; (2) reorientation o f the basic development model toward greater openness, competition and a more level playing field in the sub-regional economy, and (3) the creation of new capacity in the labor force and the private sector to take advantage of emerging opportunities in the global market place, and in the public sector to coordinate and support the process o f deeper regional (and global) integration. The current challenge facing the sub-region is how to reinvigorate and sustain growth alongside the following imperatives --reducing high unemployment and poverty rates, restoring fiscal and debt sustainability, and securing a more sustainable external position in an increasingly competitive global environment. -
Publication
Latin America and the Caribbean : A Time to Choose, Caribbean Development in the 21st Century
(Washington, DC, 2005-04)This report seeks to discuss the critical constraints to sustainable, job-creating growth, and to present policy options for the region and country Governments to stimulate such growth. It analyzes growth performance in the Caribbean over the last four decades, and highlights key determinants of past and also future growth. Given the recent deterioration in government finances, the report then studies key areas of government expenditure. A discussion of the climate for private investment follows, which looks at the framework that shapes the risks and returns for private investment. The report then discusses the impact of recent trade developments on the Caribbean, the future outlook in view of major ongoing changes in the international environment, as well as the opportunities that are likely to emerge, especially in the services sector. It then focuses on some key factors that have been significant in determining past growth in the Caribbean, including labor market issues; education, skill development and training; and, infrastructure. The report suggests a pro-active approach for the region to take on the challenges of a group of small states, facing severe resource constraints, eroding trade preferences, declining productivity, and increasing risk of macro instability. First, it argues that greater integration within the CARICOM region on several fronts will be a critical input into improving competitiveness. Second, on trade, the report argues that a negotiation of an orderly dismantling of preferences in return for increased technical and financial support would be in the region's interest. Third, improving the investment climate, and orienting it away from being subsidy-driven, addressing problems of high taxes and inefficient customs procedures, as well as specific infrastructure deficiencies, would help improve the quality of private investment and maintain the high levels of Foreign Direct Investment (FDI). Fourth, making the public sector more cost-effective and delivering services more efficiently, through greater reliance on the private sector, seeking cost efficiencies through regional cooperation. Fifth, improving the quality and effectiveness of human resources would enable diversification into knowledge-based activities including services, increase exports, and improve productivity in existing activities. -
Publication
Guatemala : Country Economic Memorandum, Challenges to Higher Economic Growth
(Washington, DC, 2005-03)The purpose of this Country Economic Memorandum (CEM) is to contribute to the ongoing discussion in Guatemala about means of accelerating economic growth to help achieve targets set in the 1996 Peace Accords as a key ingredient in the fight to reduce national poverty rates. Chapter I examines historical and recent developments and uses a benchmarking growth methodology to identify the measures and policies most conducive to increasing long-term economic growth. Those areas that are identified as critical on the list of priorities are developed further in separate chapters. Chapter II focuses on the important role of human capital development for growth, along with the complementary policies for improving education and health. Chapter III examines the investment climate, broadly understood, which includes governance, access to infrastructure, and financial development. Chapter IV analyzes the importance of innovation and technology adaptation for productivity growth. Chapter V looks at trade openness and the catalytic role that the recently negotiated free trade agreement with the U.S. (CAFTA) could have on the Guatemalan economy. -
Publication
Kyrgyz Republic : Country Economic Memorandum - Enhancing the Prospects for Growth and Trade, Volume 1, Main Report
(Washington, DC, 2005-01)This Country Economic Memorandum is aimed at helping the authorities in the Kyrgyz Republic identify factors explaining the apparent divergence between policies and outcomes, with a view to determining priorities for reform in the coming period. The main messages of the report are: 1) Kyrgyz policymakers should take advantage of the currently favorable nexus of a stable macro-environment, relatively strong gold production and international prices, and fast-growing neighboring markets, to address lingering policy and institutional deficiencies that limit the efficient restructuring of the economy away from its dependence on primary agriculture, mining and hydro-power. Action is needed to provide for more rapid progress with poverty reduction, and to mitigate the impact on the economy of an expected major decline in gold production by the end of the decade. Detailed quantitative analysis reveals a significant unrealized growth potential in agriculture and livestock products, agro processing and light manufacturing, based on prevailing inter-sectoral linkages in the Kyrgyz economy. 2) The prospects for successfully changing the growth pattern and trajectory, depend fundamentally on accelerated investment and export diversification. The contribution of foreign direct investments (FDI) to non-gold real sector investment has been minuscule over the past decade, limiting opportunities for much needed technology transfer and access to global value chains. The weaknesses of the export sector are reflected in the steady erosion of the Kyrgyz share of traditional regional markets. The report proposes a strategy for economic-cum-export diversification that requires simultaneous actions to address external, and domestic trade policy issues. Poor infrastructure, limited competitive pressures and low-level corruption, however, combine to raise trading costs to often prohibitively high levels. Safeguard measures remain a potential problem, and technical barriers to trade are pervasive in the CIS countries and elsewhere, although their impact on Kyrgyz exports has apparently been modest to date. Over the past few years, the government has adopted a range of measures aimed at reducing administrative barriers and strengthening the commercial legal system through a highly participatory reform process. In the end, however, it is firms not countries that are on the front line of international competition and business development. Favorable national circumstances, such as supportive macroeconomic conditions, friendly investment climates, and market-expanding trade agreements, contribute to competitiveness, but they do not guarantee success. -
Publication
Albania - Sustaining Growth Beyond the Transition : A World Bank Country Economic Memorandum
(Washington, DC, 2004-12-27)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. -
Publication
Ukraine - Building Foundations for Sustainable Growth : A Country Economic Memorandum
(Washington, DC, 2004-12-27)Favorable economic conditions offer a window of opportunity for the Ukrainian government External factors served as a catalyst for the economic turnaround but policies and reforms have also played a critical role. Nevertheless, the positive trends will weaken without vision at the top level of government. An "insider economy" threatens to become a primary obstacle to Ukraine's future development and also weakens the link between economic growth and welfare benefits for the larger population. This report examines the obstacles to sustainable growth and outlines the strategic vision for economic policy and reform. Specifically, it discusses adopting the economic strategy of European Choice, which addresses many o f the outstanding problems emphasized in the previous chapter. This includes strengthening legal and regulatory institutions, improving standards o f corporate governance, reducing subsidies, continuing reform in agriculture, negotiating free trade agreements, and bringing numerous standards into harmony with WTO and EU requirements. Ukraine has also established a set o f Millennium Development Goals for elevating key social indicators in the direction o f EU levels. This includes ambitious goals for poverty reduction, expanding access to quality health and education, reducing infant mortality, preventing the spread o f HIV/AIDS, achieving environmental sustainability, and addressing gender inequality in the labor market. The next task will be a more precise formulation o f policy and reform directions that are consistent with these underlying goals, including the prioritizing and sequencing of specific measures to make most effective use of the Ukrainian political process.