Country Economic Memorandum

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http://hdl.handle.net/10986/2184

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Democratic Republic of the Congo Country Economic Memorandum (CEM) - Pathways to Economic Diversification and Regional Trade Integration: Fostering Economic Diversification and Regional Integration for Faster Growth, Job Creation and Poverty Reduction

(Washington, DC: World Bank, 2023-10-26) World Bank

Economic Diversification in the DRC is hindered by a business environment and key regulatory and fiscal constraints that are not conducive to private sector-led growth. Policies aimed to address the main bottlenecks hindering sustainable and inclusive growth include: i) improving business regulation; ii) promoting access to digital, electricity, and financing; iii) addressing inefficient taxation and fiscal policy challenges; iv) encouraging fiscal decentralization; and v) attracting value chain development. The two case studies discussed in complementary reports are intended to better illustrate the opportunities and challenges described in the Country Economic Memorandum and considered important for economic diversification and job creation through structural transformation and stronger trade and regional integration. The focus is on two key potential growth-driving sectors (mining and agribusiness) that offer substantial opportunities for expansion in the context of global energy transition, food insecurity, and further regional integration. While opportunities and constraints specific to the EV battery-related mining and cassava value chain are presented (and include a climate dimension), most of the challenges and recommendations could also apply to several other products or sectors of the economy (e.g., maize or any manufactured or processed product). The purpose of the illustrative case studies is to highlight how the business environment in general is not attractive to private investment, SME expansion, or product competitiveness.
The Union of Comoros Country Economic Memorandum: Boosting Growth for Greater Opportunities

(Washington, DC: World Bank, 2023-09-14) World Bank

Comoros is at the crossroads to redefine its future and become an upper-middle income country by 2050, but this would require implementing an ambitious reform agenda that focuses on increasing productivity and private investment. The current business-as-usual policy framework has delivered low private investment and human capital, sectoral growth below potential, and no poverty eradication. Pursuing this policy framework, which would not allow Comoros to reach the GDP growth target of 7.5 percent by 2030 laid out in the national development plan, could result in GDP per capita of US$1,890 and a poverty rate of 22.9 percent by 2050. By contrast, under a policy framework of ambitious reforms that include measures to increase inclusiveness, Comoros could reach a GDP per capita of US$3,934 and reduce the poverty rate to below 5 percent by 2050. Supported by the continuous implementation of ambitious reforms, such a level of GDP per capita could have Comoros reach upper-middle-income status by 2050. Under this ambitious reform agenda, private investment would average 11.9 percent of GDP in 2023–2050, and total factor productivity growth would average 1.45 percentage points per year during the same period.
Kenya Country Economic Memorandum: Seizing Kenya’s Services Momentum

(Washington, DC: World Bank, 2023-07-31) World Bank

Kenya’s economy has been growing solidly but maintaining and increasing growth will depend on increasing private investment and productivity. Between 2010 and 2019, Kenya maintained a steady annual growth rate of 5 percent and the economy was able to rebound relatively rapidly from the COVID-19 pandemic. However, productivity growth did not make much of a contribution to output growth, and growth has been lower than that of some other, fast-growing middle-income countries. This points to the potential for Kenya to increase growth via productivity gains, by expanding the role of the private sector and, especially, accelerating private investment. Doing this has become more urgent as the Government's fiscal space to invest has shrunk, making it crucial also for the sustainability of growth to identify new opportunities for the private sector to contribute. This Country Economic Memorandum (CEM) focuses on the question of how seizing opportunities in Kenya’s services sector can contribute more effectively to long-term economic growth. This report argues that growing the services sector should not be seen as an alternative to industrialization, but rather as an enabler of economy-wide growth, including in manufacturing, and in agriculture too. It focuses on five channels through which services contribute to jobs, economic transformation and inclusion: (i) the need to SHIFT the services sector to higher value-added activities; (ii) how to LINK services better to other economic activities to grow its enabling role; (iii) how to BOOST the productivity of the sector through technology and increasing competition; (iv) how to TRADE more services through removing regulatory barriers to trade and investment; and finally (v) how to SECURE people’s economic livelihoods better, especially those working in lower-skilled and economically more vulnerable services subsectors. Growing the contribution of services will require a program of structural reforms and complementary efforts.
Papua New Guinea Country Economic Memorandum: Pathways to Faster and More Inclusive Growth

(Washington, DC: World Bank, 2023-07-13) World Bank

The Country Economic Memorandum (CEM) focuses on long-term growth, outlining the challenges Papua New Guinea (PNG) faces to achieve sufficient economic growth to expand the incomes of its rapidly growing population as well as what is required for PNG to make the transition to a higher, more stable, and more inclusive growth path. PNG’s modest headline economic growth has translated into limited per capita income growth in the past four decades. While the economy expanded by 3.2 percent on average during 1980-2021, per capita gross domestic product (GDP) recorded an average annual growth rate of only 0.9 percent. Moreover, the gap between PNG’s per capita income level and those of its peer countries has widened. Despite being at a similar level of development in the 1970s and having enormous natural wealth, PNG’s income level is diverging away from the East Asia and Pacific (EAP) region. This calls for a renewed policy focus on boosting economic growth, by addressing PNG’s excessive macroeconomic volatility, low productivity growth, and high reliance on natural capital as opposed to human and physical capital.
Yemen Country Economic Memorandum 2022: Glimmers of Hope in Dark Times

(Washington, DC: World Bank, 2023-06-22) World Bank

Yemen’s economy has been transformed by eight years of violent conflict. War has shattered the country’s already fragile economic equilibrium, touching upon virtually every aspect of life. The compounded shocks of the COVID-19 pandemic and rising global prices have only deepened the economic and humanitarian disaster precipitated by the war. Since the start of the conflict, economic analyses have tended to focus on the deterioration of macroeconomic indicators, the sharp rise in poverty and food insecurity, and the destruction of infrastructure and the capital stock, but relatively little attention has been paid to the current structure of the economy or what prospects can be envisaged for the country. Also, it is important to situate this analysis within the political economy dynamics of the country which majorly affect the economic development challenges of the country. Data constraints and the unique characteristics of Yemen’s recent experience limit the effectiveness of traditional growth-analysis methodologies. This Country Economic Memorandum (CEM) uses novel data-collection methods and analytical techniques, triangulating its findings with traditional approaches and direct data collection to close the economic knowledge gap. Information sources include extensive key-informant interviews, household phone surveys, and remotely sensed geospatial data based on satellite imagery, including nighttime illumination data. This CEM also combines an in-depth political economy analysis with economic development investigation.
Timor-Leste: Pathways to Economic Diversification - Country Economic Memorandum 2023

(Washington DC, 2023-05-03) World Bank

Timor-Leste has made important development gains since independence in 2002 but is now at a critical juncture. The government has successfully rebuilt public infrastructure, reduced poverty, and quickly built from scratch a network of functional public institutions. Despite these achievements, there is an urgent need for private sector-centered development that is not dependent on the oil sector. Receipts from sales of hydrocarbons have been the main source of government revenues, but their contribution to the economy is decreasing, raising the urgency for economic diversification. High public spending has not translated into strong and sustained economic growth. Furthermore, depleting oil reserves signal an urgency to reduce economic dependence on oil. The public sector-driven growth model has run its course and is fiscally unsustainable. The excessive public spending level led to an astronomical fiscal deficit of 45.3 percent of non-oil gross domestic product (GDP) in 2021. This fiscal stance entails significant risks that bring the country toward a damaging fiscal cliff in 2035. Albeit narrowing, there is a window of opportunity for the government to urgently implement the much-needed reforms in the next five years. There are several potential drivers for increased regional integration. These include the operationalization of the Tibar Bay port, the modernization of the Dili airport, the internet submarine cable installation, and the World Trade Organization (WTO) accession progress. Success requires a concerted and persistent government effort to address supply-side constraints, kick-start economic diversification, and boost export. This report provides an in-depth analysis of Timor-Leste’s economic performance in recent decades and proposes policies to enhance growth. It highlights two key interrelated constraints to sustained and inclusive growth: the ‘missing’ private sector and the need to tap into the growth-enhancing benefits of international trade. Given the diminishing returns of public investments, pursuing a sustainable development path will require a shift toward a more dynamic, private sector-driven growth model. Furthermore, with the right combination of a supportive enabling environment and trade policies, Timor-Leste could capitalize on incipient and established comparative advantages for its exports. Accordingly, the reforms to support private sector development and expand exports have the potential to boost Timor-Leste’s international competitiveness and improve economic diversification.
Zimbabwe Country Economic Memorandum: Boosting Productivity and Quality Jobs

(Washington, DC, 2022-10) World Bank

Despite various economic setbacks, Zimbabwe regained lower middle-income country (LMIC) status in 2018 and aspires to become an upper middle-income country (UMIC) by 2030. The focus of this Country Economic Memorandum (CEM) is to identify options for structural reforms to help Zimbabwe accelerate economic growth and to achieve UMIC status. This is the first CEM for Zimbabwe since 1985 and it comes at a critical juncture along Zimbabwe’s development path. The objective of the report is to support and inform policy makers and stakeholders on policies to accelerate economic growth, boost productivity, and create high-quality jobs. In this regard, the CEM first establishes macroeconomic stability as a necessary condition for high and sustained growth. It then uses productivity as an overall framing to identify key structural bottlenecks, before providing deep-dives on informality and trade as priority areas to address in order to unleash productivity growth. Importantly, the report also aims to present data about Zimbabwe’s economic performance in a systematic fashion, focusing on the previous two decades and comparing Zimbabwe with its peers in the region, as well as aspirational peers globally.
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.
Georgia Country Economic Memorandum: Charting Georgia’s Future

(Washington, DC, 2022-06) World Bank

From the Coronavirus (COVID) pandemic to the war in Ukraine, the world and Georgia are experiencing more uncertainty and accelerating disruption. As a small open economy looking to integrate with the global economy, Georgia must carefully navigate these trends by being prepared for the risks and on the lookout for emerging opportunities. A more capable, competitive and connected Georgia will be better placed to navigate these trends. This Country Economic Memorandum (CEM) aims to inform the policies that could offset these headwinds. To sustain productivity growth, Georgia needs to facilitate its structural transformation and the corresponding spatial adjustment (Chapters 1 and 2). Furthermore, growth will increasingly need to come from improvements in total factor productivity (TFP) in Georgia’s firms (Chapter 3) and advancement in their ability to exploit opportunities in external markets (Chapter 4). Finally, more active and better-skilled labor (Chapter 5) can help offset existing demographic trends and augment productivity. Progress in these areas, supported by higher savings, will make Georgia’s economy more competitive, connected, and capable, help sustain robust GDP growth over the long-term and turn Georgia’s aspirations into reality.
Leveraging Global Value Chains for growth in Turkey: A Turkey Country Economic Memorandum

(Washington, DC: World Bank, 2022-03-02) World Bank

Turkey saw phenomenal growth in the 2000s as economic reforms ushered in FDI, GVCs expanded, and productivity increased. The early 2000s saw Turkey exit from major economic crisis with a strengthened fiscal framework, a strengthened, inflation-targeting mandate for the Central Bank, the establishment of an independent bank regulator, and importantly, a recently agreed Customs Union agreement with the EU. From 2001 to 2017, incomes per capita in Turkey doubled in real terms and tripled in current dollar terms. Turkey transformed from a lower-middle-income country (LMIC) at the start of the 2000s to very nearly reaching high-income status by 2014. This drove a rapid fall in poverty from above 30 percent to just 9 percent1. Very few other countries matched Turkey’s growth over this period, and almost all of them were new EU member states.