Publication: Country Economic Memorandum for Sao Tome and Principe - Background Note 1: Economic Growth and Volatility in São Tomé and Príncipe
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2019-06-26
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2019-06-26
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The purpose of this background note is to give an overview of the literature on output volatility and economic growth, assess output volatility and its impact in São Tomé and Príncipe (STP). This note is organized in four sections, besides this introductory part. The second section reviews the literature on the impact of output volatility on economic growth. The third section discusses different measures of volatility, calculating volatility for STP across different periods, and compares them to peer countries. The last section offers some policy recommendations. Output volatility and its relationship with growth have been a hot topic in economic research literature for a long time. There is significant controversy about how economic volatility1 affects economic growth. Although the link between economic growth and volatility is theoretically ambiguous, a negative impact of economic volatility on output growth dominates the empirical literature. This negative relationship also holds with newer and better datasets, advanced econometrics methodologies, and for specific country groups. There are three mains messages in this note. The first one is that volatility affects growth as supported by the literature review and the econometric estimations carried out in this note. The second one is that STP is a volatile country, although volatility of GDP growth and inflation has declined over time and are in line with peers. On the other hand, STP still faces higher volatility on current account balances and net lending and borrowing than its peers. The third message is that, on average, a fifty percent increase in volatility translates into a 25 percent decrease in GDP per capita growth rates. Finally, policy measures aimed at diversifying exports in terms of goods and markets, reduce the reliance on external finance and fiscal rules can help cushion the volatility and reduce its impact.
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“Barroso, Rafael; You, Chenli. 2019. Country Economic Memorandum for Sao Tome and Principe - Background Note 1: Economic Growth and Volatility in São Tomé and Príncipe. © World Bank. http://hdl.handle.net/10986/32137 License: CC BY 3.0 IGO.”
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Publication Country Economic Memorandum for Sao Tome and Principe - Background Note 4(World Bank, Washington, DC, 2019-06-26)Sao Tomé and Príncipe is surrounded by oil-producing neighbors, but haven’t found commercially viable oil in its territory so far. São Tomé and Príncipe (STP) is surrounded by major oil producing countries including Nigeria, Equatorial Guinea, and Gabon, but there has not been any commercial oil or gas discoveries in the country’s waters yet. STP is exploring for oil in two different zones under different jurisdiction: the Joint Development Zone (JDZ) with Nigeria, and the Exclusive Economic Zone (EEZ). There are talks as well for a joint exploration zone with Equatorial Guinea. The purpose of this note is to update the status of oil and gas exploration in STP and provide a probability and timeline for eventual discoveries and commercial production. The answers to these questions are key to the country’s long-term development prospects, as it would alter dramatically STP’s development path.Publication Country Economic Memorandum for Sao Tome and Principe - Background Note 15(World Bank, Washington, DC, 2019-06-26)Oceans are an important source of wealth, at least 3 to 5 percent of global GDP is derived from the oceans, but their overall health is reaching a tipping point. Close to a third of fish stocks are fully fished or overfished, climate change is impacting coastal and marine ecosystems through a variety of vectors, unbridled development in the coastal zone is causing erosion, widespread desalination in semi enclosed seas is threatening fauna and flora alike, and marine pollution, particularly from land-based sources is reaching such a proportion that its impacts cannot even be accurately measured. The role of healthy oceans in stabilizing climate and keeping the planet cool is now better understood, and increasingly given the prominence and visibility it deserves in the global action arena. It is also known that business as usual in the different economic sectors associated with coastal and marine ecosystems will have great environmental and social impacts, which are expected to disproportionally affect vulnerable groups of the population, particularly women and girls. This is reflected in Sustainable Development Goal (SDG) 14 - Life Below Water, which calls to conserve and sustainably use the oceans, seas, and marine resources for sustainable development. In this context, the concept of the Blue Economy is particularly relevant and applicable to STP. Different institutions have different definitions of the Blue Economy, which is understood by the Bank as the sustainable and integrated development of oceanic sectors in healthy oceans. 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Burdensome regulations can hamper the competitiveness of export-oriented sectors, which are essential for São Tomé and Príncipe’s sustainable growth and job creation. Moreover, sectors that depend on natural or cultural assets, such as tourism, require good quality regulations and planning to protect those assets. Improving the regulatory environment is an important factor, together with better skills, connectivity, and infrastructure, to strengthen the competitiveness of São Tomé and Príncipe’s economy. Accurate data on the size and composition of the private sector in Sao Tome and Príncipe is lacking, but existing information shows that it is dominated by microenterprises in commerce and services. The ongoing enterprise survey will provide insights on the characteristics and main challenges of São Tomé and Príncipe’s firms, while an updated business census, which is planned with support from the World Bank, will give a broader view of the private sector. 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The second section analyzes the landscape of access to financial services (focusing on individuals and MSMEs), while the third describes some of the key limitations of the financial infrastructure in STP that create obstacles to financial sector development and access to finance. Finally, the fourth section concludes with policy recommendations that can help increase access to financial services in STP.Publication Country Economic Memorandum for Sao Tome and Principe - Background Note 12(World Bank, Washington, DC, 2019-06-26)The purpose of this note is to give an overview of the fisheries sector in STP, its potential and obstacles, as well some policy recommendations to address these obstacles, ensure sustainable management of these resources and tap into its potential. It is organized in four section, besides this introduction. The second section describes the fishing sector in STP, while the third and the fourth outline the obstacles for the development of the artisanal and industrial fisheries respectively. The last section offers policy recommendations. Fisheries play an important role for the economic and social development of the country, however resources are likely over-exploited. Coastal marine resources are showing signs of full or overexploitation around the Sao Tome island. Before looking at increasing production of coastal resources, knowledge on the status of the fish stock would have to be improved through data collection and research to understand the potential of these resources and adequate sustainable management of these resources would have to be ensure through reinforced legal framework, governance and enforcement, as well as the potential development of co-management1 system between the STP authorities and the fishing communities.
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