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Property tax compliance in Tanzania: Can nudges help?

29. September 2021 - 18:55

By Matthew Collin, Vincenzo Di Maro, David K. Evans, Fredrick Manang

Abstract

Low- and middle-income countries around the world struggle with low tax compliance together with limited capacity to enforce compliance. This paper reports the results of a randomly rolled out text-message campaign aimed at promoting compliance among landowners in Dar es Salaam, Tanzania. Landowners were effectively randomly assigned to one of four groups designed to test different aspects of tax morale. They either received a simple text-message reminder to pay their tax (a test of salience), a message highlighting the connection between taxes and public services (reciprocity), a message communicating that non-compliers were not contributing to local or national development (social pressure), or no message (control). Recipients of any message were 11 percent (or 1.2 percentage points) more likely to pay any property tax by the end of the study period. Across treatments, simple reminders and reciprocity messages delivered similar gains in payment rates, whereas social pressure messages delivered lower gains in payment rates. Actual payment amounts were highest for reciprocity messages. The average estimated benefit-cost ratio across treatments is 20:1 due to the low cost of the intervention, with higher cost-effectiveness for reciprocity messages.

Download the working paper

 

      
Kategorien: english

Industries without smokestacks in Tunisia: Creating jobs in tourism and ICT

29. September 2021 - 18:21

By Sami Mouley, Amal Nagah Elbeshbishi

Tunisia, like many African countries, is facing an influx of young people into its workforce, but the country doesn’t have enough jobs to absorb them. Recent research, though, reveals that there might actually be great potential and even a comparative advantage for job creation in Tunisia in “industries without smokestacks” (IWOSS). IWOSS are sectors that share much in common with manufacturing, especially their tradability and tendency to absorb large numbers of low-skilled workers. Examples of IWOSS include agro-industry, horticulture, tourism, and some information and communication technology (ICT)-based services.

Through an adequate management of these sectors, job creation and export development could allow the creation of new areas of comparative advantage and have a positive impact on other sectors as well. As Tunisia’s economic growth rate has lowered to 2 percent in the period from 2012 to 2019 (according to the Central Bank of Tunisia), we must consider new strategies and other policy improvements to reverse this trend and boost job creation in the country.

The challenges in this area are spread over several fronts. The Tunisian labor market suffers from a mismatch between labor demand and supply, as well as a strong imbalance linked to the gender gap. This phenomenon mainly concerns women, young people, and graduates (European Training Foundation, 2019). The latter are often excluded from the labor market due to a mismatch of skills required to enter the job market, despite their acquisition of qualifications and degrees.

Thus, our research proposes a way out of youth unemployment through an analysis of the Tunisian economy since the 1960s, including forecasts following the COVID-19 crisis, with the aim of providing an alternative perspective that looks beyond conventional “smokestacks” manufacturing and builds on strengths to find room for improvement in industrial policy, including nontraditional agriculture or services.

Why are IWOSS so important?

This study aims to show how the job creation, combined with the identification of the skills required to work in a given field, might have a concrete impact in decreasing youth unemployment. The impact of IWOSS on the Tunisian economy emerged as early as the 1980s, when the market shifted toward this new economic sector, which represented 44 percent of Tunisia’s GDP on average between 2015 and 2019.

Furthermore, through a comparative approach with other activities, we find that the growth in value added by activity sector indicates the relative importance of IWOSS sectors—especially the tourism sector, followed by the transport and financial sectors—to the Tunisian economy. Because of their particular potential for growth in the Tunisian context, we examined the specific IWOSS subsectors of tourism, financial services, and ICTs, and found that, generally, their contributions to the Tunisian economy result in a better capacity to resist and adapt to structural shocks.

Table 1. Growth in added values by activity sectors at prices of the previous year (annual change in %)

Source: Table from Mouley, and Elbeshbishi, (2021). “Addressing youth unemployment through industries without smokestacks: A Tunisia case study.” The Brookings Institution.

Recommendations

The COVID-19 crisis had an undeniable impact on all sectors of the Tunisian economy—especially tourism—though agriculture, fisheries, and ICT suffered least. Given the widespread damage on top of the already high youth unemployment rate, a multistakeholder response is essential for creating jobs for young Tunisians. In order to unearth the employment generation capacity of IWOSS sectors, key constraints that inhibit the growth of these sectors have to be addressed. In short:

  • Tourism. Tunisia still needs some crucial enablers like political stability, public-private partnerships, and the development of promotional campaigns that further enhance Tunisian culture, traditions, and national heritage to make the tourism industry even more prosperous. Building infrastructure, especially improving transport and communications for tourism, would also have a positive impact on other sectors such as agriculture and construction.
  • Information and communications technology. For the purpose of enabling greater development of the ICT sector, policymakers should commit to enhancing social inclusion and making high-quality ICT training and education accessible. Such interventions could lead to the development of e-Administration and encourage investments in the ICT industry to create jobs. The “Digital Tunisia” and “Smart Tunisia” programs provide a clear strategy to this end.
  • Financial services. Policymakers should aggressively encourage a transition to digital tools, promote digital payments, and support the development of further technological innovation.

In the end, we find that the ICT, financial services, and tourism sectors can be critical for addressing the country’s jobless growth challenges, if interventions like improved infrastructure, better access to long-term financing, and enhanced digitization, among others, can be implemented.

      
Kategorien: english

USAID’s local staff are an overlooked resource to advance locally led development

29. September 2021 - 17:30

By Justin Fugle

Last week’s House Foreign Affairs Committee Hearing on locally led development highlighted the bipartisan consensus about its numerous benefits. Subcommittee chairman Rep. Joaquin Castro (D-TX) noted that each of the last four administrations has advanced this vital foreign aid reform because “evidence indicates that working with local partners improves the effectiveness and sustainability of our foreign assistance programs.” Ranking Member Rep. Nicole Malliotakis (R-NY) concurred saying, “until we support meaningful local ownership of local challenges and build the capacity of local organizations to solve these problems themselves, our foreign assistance will not have lasting impact.”

In other recent Congressional hearings, USAID Administrator Samantha Power has repeatedly called for the U.S. Agency for International Development to advance locally led development. “In order for us to get the most out of our programs” she said, “we need to increase local partnerships and address staffing shortfalls,” calling the push toward locally led development “the essence of whether the development we do is going to be sustained over time.” In March, Power struck a similar chord, “effective development is driven by those on the ground with local knowledge and expertise.”

In her July testimony, Power identified USAID’s massive shortage of contracting officers (COs) and agreement officers (AOs) as a critical problem standing in the way of more locally led development. She said each USAID CO “has managed over 65 million dollars annually over the past four years—more than four times the workload of their colleagues at the Department of Defense.” Given such a heavy workload, it may be understandable that some USAID staff would choose the path of less resistance, leading them back to USAID’s traditional U.S.-based implementing partners. In fact, in 2017 USAID found that just 25 of its U.S.-based implementing partners received fully 60 percent of its funding, reducing competition and innovation. Power also explained that, according to the latest data, just 5.6 percent of funding went to USAID’s local partners. Yet, however understandable this procurement shortcut may be, it is leading to U.S. foreign assistance investments that too frequently have no local roots and which essentially evaporate into thin air, as the recent headlines from countries like Afghanistan and Haiti demonstrate all too clearly.

This nonlocal approach and its negative consequences are recognized by the agency and USAID has already made several attempts to increase implementation through local actors. For example, since 2009, initiatives like Local Solutions, the Local Systems Framework, and the Journey to Self-Reliance, Local Works, the New Partnerships Initiative (NPI), and USAID’s Acquisition and Assistance Strategy have all taken steps in the right direction. Yet the vast majority of USAID’s funding still does not flow through local actors because USAID has not changed its ways of doing business through vigorous procurement reform and the requisite staffing levels of COs and AOs to implement it.

Hitting precisely on these points, in July, Sen. Chris Coons (D-DE), chairman of the Senate appropriations subcommittee that oversees USAID’s budget (SFOPs), asked Powers what she considered to be a potential strategy for “increasing the localization of our assistance programs” and how additional staff would ensure U.S. funds better support local partner-led initiatives. Coons added, “I look forward to working with you on tackling USAID’s procurement processes and the challenges in terms of both regulations and staffing.” On the House side, SFOPs chairwoman Barbara Lee’s FY22 bill, which has already passed the House, also clearly supports the growth of locally led development, requiring USAID to report to Congress on funding for programs “implemented directly by local and national NGO entities” and also on how USAID plans to increase these resources in the future.

This recognition by top decisionmakers on the Hill and the administration is very encouraging. Finally, the wonky problem of USAID’s business practices has come to light as perhaps the single largest barrier to advancing locally led development. There is urgency to more effectively use U.S. foreign aid, and thankfully, a major part of the solution Power, Coons, and Lee are seeking is already working at USAID and has already proven its mettle in response to the COVID crisis—USAID’s local staff.

When USAID’s foreign service officers (FSOs) were evacuated at the start of the COVID-19 pandemic, then Administrator Mark Green, delegated authority to USAID’s local staff, mainly foreign service nationals (FSNs), to continue the work of USAID without their American supervisors. The FSNs were given special temporary authority to sign contracts and obligate funds on behalf of the U.S. government; that is, to act as COs and AOs. By making this delegation of authority permanent, Administrator Power could quickly and significantly increase USAID’s cadre of COs and AOs, opening the door to much greater progress on locally led development. Doing so would also allow the agency to more fully benefit from the local contacts of these very valuable local professionals, who USAID staff regularly refer to as “the backbone of the agency.”

This idea is supported by the Modernizing Foreign Assistance Network (MFAN), which called on appropriators to “evaluate the continuation of the expanded management and supervisory roles of Foreign Service Nationals during USAID’s COVID-19 response.” Similarly, the USAID Alumni Association has called for USAID to “accelerate efforts to enhance the roles and responsibilities of Foreign Service National (FSN) employees in USAID’s field missions. This should include responsibilities for program management.” In addition, recently acting USAID Administrator Gloria Steele has also endorsed the idea of local staff having warrants to act as COs and AOs, saying “they stay with USAID, they are retained … so having them keep their warrants will help solve a number of problems at once and is a win-win.”

Quickly increasing the number of USAID COs and AOs by extending or reinstating the warrants of well-qualified and experienced FSNs is well within the authorities of the administrator. To do so most effectively, USAID should be able to increase the salaries for qualified FSNs (enable them to become a grade 12 or 13) in line with the increased responsibilities, authorities, and accountabilities that holding a warrant entails. A clear set of norms to reflect on bias or perceived conflicts of interest in the local context should also be put in place. Then, USAID should also open a pathway for more FSNs to become CO/AOs by having them work under the supervision of FSOs who would then recommend they receive a warrant to sign contracts and agreements.

These steps would also help USAID advance its commitments to diversity, equity, and inclusion (DEI), and professional recognition and fairness. Retired FSNs have been vocal about their subordinate position within USAID, and while some mission directors have created FSN senior advisor positions in the front office, USAID’s overall unwillingness to recognize them as fully-capable professionals takes its toll. Former FSNs like Jamal al Jibiri, detailed their reasons for frustration, noting that when American officials arrived at post and met with the FSNs: “They would always have this one line about ‘we would be nothing without you guys; if it wasn’t for you nothing would operate; it’s you guys who run everything so we really need you guys and appreciate you.’” The former Jordanian FSN continued to explain why these statements were so defeating. “If there was a real appreciation for the FSNs,” he said, “it would be reflected in how we are compensated and how we’re seen, but to tell us that everything would fall apart without us, but not to take that into consideration when you’re looking at compensating us or looking at rewarding us, then it’s meaningless.” Unfortunately, many similar accounts can be found in the archives of the Oral History Program of the Association for Diplomatic Studies and Training (ADST).

In this regard, part of the solution to USAID’s critical CO/AO shortage has the potential to advance both locally led development and the effort to decolonize USAID’s staffing model. USAID leaders should carefully consider this opportunity to reduce a major obstacle to achieving the agency’s goals on locally led development. Hill leaders who favor locally led development and DEI should also support this innovation by USAID. The FSNs’ decades of professional contributions and the positive experience of their mission leadership during COVID-19 show that they are ready to do more.

      
Kategorien: english

G-20 support for improved infrastructure project cycles in Africa

28. September 2021 - 17:56

By Aloysius Uche Ordu

      
Kategorien: english

Addressing youth unemployment through industries without smokestacks: A Tunisia case study

28. September 2021 - 14:10

By Sami Mouley, Amal Nagah Elbeshbishi

Abstract

Although the manufacturing sector is known to have a unique role in structural transformation, the industries without smokestacks (IWOSS) that include tradable services, and that concern in Tunisia mainly IT, tourism, transport, trade, and financial services, can provide new opportunities for export development and in turn drive economic growth. As such, and for each of these sectors, Tunisia is particularly well positioned to exploit the opportunities in industries without smokestacks.

This study takes the case of Tunisia and examines the current state and contribution of the industries without smokestacks to the economy and exports with the aim of improving our understanding of the major bottlenecks and solutions to unlocking the potential of these industries. The study gives special attention to the main market service activities cited above, given their great importance in job creation especially for youth. It aims particularly to analyze how youth unemployment can be solved through job creation in these IWOSS industries, as well as the identification of the skills required for these young people to find work.

Download the full case study

 

      
Kategorien: english

The risks of an uneven economic recovery in an unequal world

27. September 2021 - 21:52

By Ambar Narayan, Alexandru Cojocaru, Miriam Muller, David Newhouse

The COVID-19 pandemic has impacted the world’s most vulnerable populations through lost lives, health, jobs, incomes, assets, and education. The World Bank’s High-Frequency Phone Surveys (HFPS) help identify the main fault lines along which the pandemic’s unequal impacts are emerging in developing countries (country-level indicators produced with this data are shown in an interactive dashboard). The pandemic intensified inequalities between higher-income and lower-income countries, men and women, and workers from different socioeconomic groups. While the initial impacts of the pandemic reinforced preexisting inequalities, the world must now turn its attention to the risks of an uneven economic recovery and the long-term threat it poses to social mobility and inequality.

Early insights (using harmonized multicountry HFPS data) from April-June 2020 suggested extremely large impacts on incomes, jobs, food security, and children’s education, associated with the stringency of policy measures undertaken during the pandemic. On average, more than one-third of those working before COVID-19 across 52 countries stopped working; more than 60 percent of households reported income losses across 30 countries. A pattern of widening gaps between rich and poor countries emerged early on: Income losses, disruptions to children’s education, and food insecurity were much more common among households in poorer countries. In addition, emergency social transfers were inadequate to offset impacts on income in low-income countries. For example, per capita social protection spending on COVID-19-related measures was $4 on average from March 2020 to May 2021 in low-income countries, compared to nearly $850 per capita in high-income countries.

Within developing countries, the economic impacts seemed to reinforce preexisting inequality patterns. Large segments of the population who were at a disadvantage in the labor market before the shock—women, younger workers, and workers with less education—were much more likely to lose their jobs in the first three months of the pandemic (Figure 1). Income losses were also more likely among respondents with no college education and households with self-employed or casual workers. Access to learning while schools were closed was more severely limited for children in larger households and in households where the survey respondent was less educated. There were some exceptions to these patterns. For example, in some low-income countries, educated workers were more likely to stop working, as they tended to be employed in the urban service sector that was strongly affected by the pandemic.

Men and women also experienced the pandemic with significant differences. While men were more likely to die from COVID-19, women were affected more in other dimensions of well-being. Women disproportionately suffered from mental health impacts and experienced a higher risk of dying during childbirth or having stillbirths. Women shouldered increased responsibility for additional care needs with school closures and increased illnesses among family members, which affects their ability to return to work as economies reopen. As women lost paid work at a higher rate relative to men, their unpaid work went up; and women entrepreneurs were at a greater risk of having their businesses closed than men. Evidence also suggests a steep increase in violence against women during the pandemic.

COVID-19 hit in a world where inequality was already pervasive and socioeconomic mobility was not improving. It may worsen these trends through three main channels:

  1. Lasting impacts of job and business losses, which can be particularly severe for vulnerable workers.
  2. Higher likelihood among poor households to adopt strategies to cope with income losses that reduce their productivity over time.
  3. Disruptions to schooling unequally affecting children from different socioeconomic strata.

Evidence from past crises shows that those who are most affected may take longer to recover. Our analysis of the HFPS data shows early indications of this occurring from the current pandemic.

After severe dips in April-June 2020, income and employment saw a partial rebound by September 2020 in the 17 countries in our sample where policies restricting mobility became less stringent. Encouragingly, food security and employment improved at a similar rate for countries at different income levels. However, the improvements by September did not restore employment to pre-pandemic levels and were not enough to significantly reduce the gaps in initial job losses between women and men, non-college- and college-educated, and young and older workers. For example, female employment had only recovered 30 percent of what was lost between pre-pandemic and May-June (versus 49 percent for men). Furthermore, a detailed analysis of six countries shows that male, younger, and college-educated workers in these countries were less likely to lose their jobs and more likely to find a new job if they lost one.

Particularly among poorer households, much of the recovery may also be driven by lower-quality jobs. In six countries, self-employment accounted for 83 percent of the increase in employment rates from May to September for primary-educated workers, compared to 58 percent for workers with tertiary education.  In some countries (such as Nigeria), agricultural employment increased sharply, suggesting individuals took on farm work to cope with other job losses.

While food security continued to improve, data from September 2020-January 2021 for eight countries indicates that disparities by gender and location in employment persisted even as policy stringency improved. There were warning signs about a stagnating recovery—in a sample of 14 countries, the recovery in employment appears to have stalled in the last quarter of 2020.

The pandemic has underscored the need for building an effective and equitable public health system, investing in safety nets and social insurance, and instituting fiscal policy that raises resources fairly and efficiently to finance investments. The first priority is ensuring widespread and equitable access to vaccines. Second, governments need to help children and parents transition back to school and facilitate reentry of workers most likely to remain unemployed. Older and low-educated workers might also require more support to deal with the consequences of rapid technological change. To reverse gender disparities, there must be a concerted, multisectoral effort to empower women and girls worldwide. These recommendations are a first step in what should be a coordinated global effort to prevent the growth in socioeconomic inequities and disparities across income, age, and gender that may result from the COVID-19 pandemic. Making our societies more equitable and resilient to future crises requires taking on structural inequalities today.

      
Kategorien: english

China’s youth: Increasing diversity amid persistent inequality

27. September 2021 - 20:53

As China’s influence on the global economy and regional security grows — alongside tensions with the United States — it has become even more important to understand the distinct characteristics and views of China’s youth, who will increasingly shape the country’s trajectory. China’s millennials and younger age cohorts have arguably witnessed greater socioeconomic and demographic changes than prior generations. They have not only been integral participants in China’s rapid economic rise, but also have been distinctively engaged in evolving family planning policies, the largest domestic rural-to-urban migration in Chinese history, the opening of extensive educational opportunities abroad, and the arrival of the digital era.

As members of the younger generations are assuming more prominent roles in the country, what kind of relationships will they have with the Chinese government? How do their views, values, and voices differ from preceding generations in the PRC? What are their intra-generational differences, and what characteristics do they share with counterparts around the world?

On October 15, the John L. Thornton China Center at Brookings will host Li Chunling, who will present the key findings from her new book “China’s Youth” from Brookings Institution Press, and a panel discussion of leading experts who will examine the implications of this exceptional generation for the country and the world. Viewers can submit questions via email to events@brookings.edu or via Twitter at #USChina.

      
Kategorien: english

Aligning COVID-19 recovery efforts with the SDGs – Toolbox and principles

27. September 2021 - 16:46

By Anthony F. Pipa, Meagan Dooley, Homi Kharas

      
Kategorien: english

What’s next for poverty reduction policies in China?

24. September 2021 - 19:42

By Maria Ana Lugo, Martin Raiser, Ruslan Yemtsov

Earlier this year China’s government announced that it had eradicated absolute poverty, measured against a standard equivalent to $2.30 per person per day applied to rural areas. The latest Household Survey on Income, Expenditure and Living Conditions data by China’s National Bureau of Statistics, available for the year 2018, suggest that against an international poverty line of $1.90 per day, the poverty rate had declined to below 0.5 percent. This suggests China has reduced the number of poor people by close to 800 million since 1980. Whatever the specific numbers, China’s poverty reduction is a remarkable achievement. Yet, it cannot be the end of China’s efforts. As the country looks to the 2020s, what lessons can the authorities learn from the past 40 years and what should be the focus of policy?

Growth, mostly

China’s poverty reduction success since 1980 is primarily a story of sustained economic growth. The first decade of reform saw rapid income gains in agriculture, as China removed some of the biggest distortions of the Mao era. In the second decade, industry took the leading role, both in urban and rural areas, as reforms widened and deepened. During the third decade, the dynamism of China’s export-oriented coastal areas spread further inland, as migration to the urban centers accelerated, infrastructure investments (such as with the “Western Development Strategy”) multiplied, and a growing proportion of China’s territory became economically integrated into global value chains. This decade also saw an expansion of China’s social policies, including place-based interventions in the most backward counties and the creation of a basic safety net for China’s rural population. During the final decade, these social policies were widened, culminating in the targeted poverty eradication campaign of the past five years. Only during this final period did transfers become a more important driver of poverty reduction than labor incomes (see Figure 1).

Three lessons stand out:

  1. The speed and scale of China’s poverty reduction since 1980 is partially related to the starting point. As Martin Ravallion points out, China in 1980 was one of the poorest countries in the world, and yet had a relatively healthy and well-educated population—comparable to other East Asian countries with much higher levels of income. China’s savings rates were also high and land distribution equal—initial conditions that allowed other East Asian countries to grow rapidly during the 1960s and 1970s. China in the 1980s and 1990s was thus to some extent catching up with its peers.
  2. Market-oriented reforms drove the expansion of economic opportunities. China’s economic transformation from a largely rural and agrarian country to a predominantly urban, industrial powerhouse followed the country’s comparative advantage, using market signals to create appropriate incentives, and competition among regional governments to test policies and among companies to catalyze productivity gains. China introduced market incentives gradually. But its story of transformation and growth is consistent with classical economic theories of development.
  3. Although markets and business played the leading role, government policy was also instrumental. China’s state is endowed with high administrative capacity and the government used this to provide public goods and overcome collective action failures. This is most evident in the expansion of public infrastructure that helped integrate rural areas with urban economies, and in the coordination of stakeholders in the targeted poverty reduction. High-powered incentives in the management of China’s civil service created a strong performance orientation, while a high degree of decentralization allowed policy to be responsive to local conditions.
What’s next?

China’s conditions today create mixed prospects for growth and income gains among the poor. China’s technological capabilities and the competitiveness of its leading companies are on par with high-income countries, and its best performing schools and students rank top in the world. But these capabilities are not broadly shared. The dispersion of productivity levels across Chinese companies is high. Average educational attainment of the labor force is low by comparison with high-income countries and access to good education remains unequal (Figure 2). China needs to pay more attention to these inequalities.

Market-oriented reforms could be an important catalyst for the greater diffusion of technological capabilities and for improved access to quality services. Among companies, leveling the playing field in access to finance and land could help promising small and medium businesses grow and create the jobs of the future. Lifting the remaining hukou related restrictions to labor mobility could help the current generation of school children access better education and health services in urban areas, improving social mobility and economic opportunities. This would over time help alleviate the risk of shortages of skilled labor, including in the urban service sector, which is likely to drive future productivity growth.

China’s administrative capacity is an asset in its transition to high income, but the government’s role in supporting the poor and vulnerable will have to shift. China’s poverty line is below the level in most upper-middle-income countries, and less than half the $5.50 per day typical of upper-middle-income countries. Adopting a higher line would change the profile of the poor: At $5.50, around one-third of the roughly 180 million poor would be in urban areas, for example, and many of them would be informal, migrant workers outside of agriculture. Among these groups, poverty is more likely to be transient, associated with spells of unemployment and out of pocket health and education expenses. Social policies would need to recognize these differences, just as targeted poverty reduction was based on an evaluation of household needs in rural areas.

Following the eradication of absolute poverty, China has set the year 2035 as the target date to achieve common prosperity. This is understood as providing the opportunity for a decent standard of living to all Chinese citizens. Ensuring equal access to education, health care, and other services, leveraging market signals and competition to encourage innovation and the diffusion of technologies, and repeatedly adjusting government policies to ensure social transfers target key vulnerabilities and help China’s citizens manage the risk of a rapid socioeconomic transformation—these are the lesson of the past 40 years. They will continue to serve China well on the road ahead.

      
Kategorien: english

A new proposal for the G-20 to strengthen the global financial safety net

24. September 2021 - 17:30

By Brahima Coulibaly, Eswar Prasad

      
Kategorien: english

Beneficial ownership in Mongolia: A way forward

23. September 2021 - 16:00

By Michael Barron, Tim Law, Jake Hartnett, Batsugar Tsedendamba, Amar Adiya, Ariuntsetseg Jigmeddorj

Beneficial ownership transparency (BOT) is important to build trust and confidence in the integrity of extractive industries, and indeed a country’s entire economy. Demands from international investors, finance providers, and citizens for increased transparency around the ultimate ownership and benefit derivation from extractive activities are growing. Meanwhile, more and more governments worldwide seek to clamp down on tax evasion, corruption and money laundering.

Mongolia, as it continues to compete with other countries to attract investment and financing to its mining sector, will need to meet the expectations of greater transparency in its extractives sector. It has already introduced the concept of beneficial ownership (BO) into its legislation as part of anti-money laundering laws. However, implementation is lacking, with many parts of the BOT process incomplete.

The Leveraging Transparency to Reduce Corruption (LTRC) project, a global action-research initiative led by The Brookings Institution’s Governance Studies program and Results for Development’s Accountability and Citizen Engagement practice, seeks to identify and build the conditions for an effective beneficial ownership ecosystem in Mongolia. In a November 2020 roundtable with stakeholders in Mongolia from civil society, government, and international organizations, several research priorities emerged, including the need to review the legislative framework that governs BOT and the supply of data in the registry.

This report, entitled “Beneficial Ownership in Mongolia: A Way Forward,” analyzes the pending BO agenda and a recommended path to implementation in Mongolia’s mining sector. It outlines clear recommendations on actions that government, parliamentarians, civil society, and business stakeholders in Mongolia can take to enhance the collection, storage, verification, and public disclosure of BO information. It is based on a structured and rigorous review of Mongolia’s BO legislation and mechanisms, as well as in-depth interviews with Mongolian government officials, civil society representatives, and international stakeholders.

The report comprises the following sections:

  • Assessment of the current BO situation in Mongolia and the register of government assets
  • Description of the international architecture of BO
  • Stakeholder mapping and engagement
  • Gap analysis of the current situation in Mongolia vis-à-vis international best practice
  • Recommendations and next steps

Download the full report in English here; a Mongolian-language version is forthcoming.

About Results for Development

Results for Development (R4D) is a leading non-profit global development partner. R4D collaborates with change agents around the world—governments, civil society and innovators—to create strong systems that support healthy, educated people. R4D combines global expertise in health, education and nutrition with analytic rigor, practical support for decision-making and implementation, and access to peer problem-solving networks.

About The Brookings Institution

The Brookings Institution is a nonprofit organization devoted to independent research and policy solutions. Its mission is to conduct high-quality, independent research and, based on that research, to provide innovative, practical recommendations for policymakers and the public. The conclusions and recommendations of any Brookings publication are solely those of its author(s), and do not reflect the views of the Institution, its management, or its other scholars. This publication is based on research primarily funded by the BHP Foundation. The findings, interpretations, and conclusions in this report are those of the authors and do not necessarily reflect positions or policies of the BHP Foundation or other donors. Brookings recognizes that the value it provides is in its absolute commitment to quality, independence, and impact. Activities supported by its donors reflect this commitment.

      
Kategorien: english

Greening the AfCFTA: It is not too late

16. September 2021 - 21:17

By Colette van der Ven, Landry Signé

Abstract

Environmental sustainability is a key component of Africa’s Agenda 2063: The Africa We Want. Yet, the recently launched African Continental Free Trade Area (AfCFTA) contains only minimal references to the environment.

This policy brief highlights various ways in which State Parties can strengthen the linkages between the AfCFTA and the environment, with a focus on concrete approaches and strategies. With respect to the AfCFTA protocols that have already been negotiated—including the Annexes on Technical Barriers to Trade, Sanitary and Phytosanitary Measures, and various Annexes on trade facilitation—strategic implementation can enhance the link between the AfCFTA and the environment. With respect to ongoing negotiations, including on tariff schedules and services concessions, as well as future negotiations on the Protocols of Intellectual Property, Investment, Competition and E-commerce, State Parties have the option of more clearly emphasizing the link between the AfCFTA and the environment.

The policy brief also encourages the AfCFTA Secretariat to explore the possibility of adding a Protocol on the Environment and Sustainable Development.

Download the full policy brief

 

      
Kategorien: english

COVID-19: How can the G-20 address debt distress in sub-Saharan Africa?

16. September 2021 - 20:37

By Aloysius Uche Ordu

      
Kategorien: english

Liberia improves in economic opportunity but still tax mobilization, infrastructure, and business environment struggle to see gains

16. September 2021 - 19:38

By Tamara White

Good governance—according to the Mo Ibrahim Foundation, the provision of political, social and economic public goods and services that every citizen has the right to expect from their government—has been more crucial than ever before due to the COVID-19 pandemic. Indeed, good governance has been vital in ensuring that citizens are protected from any devastating impacts. It includes aspects of citizens’ participation, rights and inclusion, security and rule of law, human development, and economic opportunity.

To more deeply delve into these issues, on August 26, Brookings Africa Growth Initiative Senior Fellow and Director Aloysius Uche Ordu joined Jeanine Cooper, Liberia’s minister of agriculture; Bioma S. Kamara,  former minister of finance; Mawine G. Diggs, Liberia’s minister of commerce and industry, and Monie R. Captan, chairman of the board of directors at the Liberia Electricity Corporation for a conversation on trends in Liberia’s governance record utilizing the Mo Ibrahim Foundation’s Ibrahim Index of African Governance (IIAG). The discussion, one of many panels, was co-hosted by the Mo Ibrahim Foundation and the Ellen Johnson Sirleaf Presidential Center for Women and Development.

While the event featured many panels, including on human development and security and rule of law, Ordu moderated the panel on “Foundations for Economic Opportunity”—Liberia’s most-improved category in this year’s IIAG. Despite this progress, as the panelists discussed, Liberia ranks second-lowest in the IIAG “trade environment” and has room for improvement in several other related indicators. As such, Ordu led the expert panel in a discussion of Liberia’s improvements in its rankings as well as barriers to success for the country in enhancing economic opportunity. The main points of the discussion included:

Public administration. According to the United Nations, good governance, supported by strong public administration, is the heart of sustainable development. This year, Liberia made substantial strides in the “public administration” category of the IIAG, most notably in civil registration, Liberia was able to improve its civil registration score by 37.5 points from 2010 to 2019, owing largely to an increase in birth registrations. Birth registration is important because it gives children a legal identity, which enables their access to their fundamental rights as citizens.

Liberia still has a long way to go in other areas of public administration, though, as the panelists noted. In fact, tax and domestic revenue mobilization was a central theme of the panel discussion, as the  country’s score in this area declined precipitously between 2010 and 2019. Importantly, the World Bank recommends that, to effectively deliver sustainable and equitable growth, all countries should raise tax revenue equivalent or higher than 30 percent their GDP. In 2013, Liberia was reported at about 13 percent—showing urgent need for improvement. Panelists recommended a number of interventions including, making commitments to infrastructure, increasing public sector projects, and finding ways to collect taxes more efficiently.

Business environment. Overall, Liberia’s performance also dropped in the category of “business environment.” More specifically, according to the IIAG, the country received high marks in regional integration but still suffers from onerous business regulations. For example, according to the World Bank’s Doing Business Report, bureaucratic compliance for trading across borders in Liberia takes an average of 193 hours to complete. Improving efficiency in compliance at its border is an important step in improving the ease of doing business in the country. Panelists agreed that border compliance is an issue and stated that Liberia needs to move into a digital space to fix this issue. With the processes at the border still being done manually, delays are inevitable, and compliance will continue to be a barrier for the country.

Infrastructure. Like in many sub-Saharan African countries, poor infrastructure in Liberia inhibits economic growth. Given the importance of technology for modern economic growth, the panel extensively discussed electricity access, reliability, and cost. Notably, Liberia has one of the lowest rates of electricity access in the world as well as some of the highest electricity tariffs, at $0.54 per kWh. Liberia also struggles with power theft rates of 55 percent, which are also the highest in the region. Power theft, defined by the Power Theft Act, is the tampering with meters, transmission and distribution lines, and general theft of meters, light poles, wires, and transformers. Indeed, a press conference in August of this year revealed that the Liberia Electricity Corporation (LEC) had lost $220 million to technical losses, commercial losses, and unpaid bills from this issue. Panelists were optimistic regarding the country’s ability to improve access and cost, though, arguing that the new Electricity Law of Liberia can better enable the country to build and regulate the electricity sector more efficiently.

Rural sector. Importantly, while Liberia’s performance in the rural sector (e.g., rural market access and rural sector support) improved since the last report, the panelists were keen to note how closely infrastructure and the rural sector are intertwined. With customary land ownership denied in some rural areas until the implementation of the 2018 Land Rights Act—which empowered rural communities by strengthening of rights of local, customary landowners—these communities suffered tremendously. According to one panelist, because 80 percent of the country’s citizens participate in agriculture in some way, this act has been a “game changer” for the rural sector. Panelists also noted that there have been uptakes in rural sector support as part of wider efforts to boost the rural economy through commercialization.

Gender equality. Another important aspect of the conversation was the role and rights of women, especially in rural areas. Indeed, one panelist noted that women do not have the same access to land as men in the country, despite about 70 percent of rural work being done by women. To truly strengthen the rural sector, the panel agreed, gender equality must be at the forefront of conversation, and women must be able to have autonomy over their own land.

Madame Ellen Johnson Sirleaf, former president of Liberia and founder of the Ellen Johnson Sirleaf Presidential Center for Women and Development, closed the full event by emphasizing the importance of good governance in bolstering economic development and inclusive growth as well as improving the livelihoods of all.

      
Kategorien: english

How to kick-start the decoupling of emissions from economic growth in MENA

15. September 2021 - 20:36

By Martin Philipp Heger, Lukas Vashold

The burning of organic materials (such as fossil fuels, wood, and waste) for heating/cooling, electricity, mobility, cooking, disposal, and the production of materials and goods (such as cement, metals, plastics, and food) leads to emissions. This affects local air quality and the climate. In a recent blog, we showed that the Middle East and North Africa region (MENA) lags behind all other regions in decoupling air pollutant emissions from economic growth.

Particulate matter with a diameter of less than 2.5 micrometers (PM2.5) is the air pollutant associated with the largest health effects. MENA’s cities are the second-most air-polluted following South Asia; virtually all of its population is exposed to levels deemed unsafe. In 2019, exposure to excessive PM2.5 levels was associated with almost 300,000 deaths in MENA and it caused the average resident to be sick for more than 70 days in his or her lifetime. It also carries large economic costs for the region, totaling more than $140 billion in 2013, around 2 percent of the region’s GDP.

A good understanding of the emission sources leading to air pollution is necessary to planning for how to best reduce them. Figure 1 shows that waste burning, road vehicles, and industrial processes accounted for around two-thirds of PM2.5 concentrations. Electricity production is also a significant contributor, most of which is used by manufacturing and households.

5 priority barriers and opportunities for policy reforms to kick-start decoupling

A forthcoming report titled “Blue Skies, Blue Seas” discusses these measures, alongside many others, in more detail.

1. Knowledge about air pollution and its sources is limited, with sparse ground monitoring stations. Detailed source apportionment studies have only been carried out for a few cities within the region, with results often not easily accessible for the public.

Extensive monitoring networks and regular studies on local sources of air and climate pollutants are foundational, as is making results easily accessible to the public (e.g., in form of a traffic light system as is done in Abu Dhabi). This will empower sensitive groups to take avoidance decisions, but also nurture the demand for abatement policies.

2. MENA’s prices for fossil fuels and energy (predominantly from burning fossil fuels), are the lowest in a global comparison. For example, pump prices in MENA for diesel ($0.69 per liter) and gasoline ($0.74 per liter) were about half the EU prices and less than two-thirds of the global average in 2018.

MENA’s heavy subsidization of fossil fuels, whether that is at the point of consumption or at the point of intermediary inputs in power generation and manufacturing, makes price reforms essential. Aside from incorporating negative externalities better, lifting subsidies also reduces pressure on fiscal budgets, with freed-up fiscal space being available to cushion the impact for low-income households. There have been encouraging steps by some countries such as Egypt, which reduced the fossil fuel subsidies gradually over the last couple of years, leading to significant increases in fuel prices, which in turn had positive effects on air quality.

3. Underdevelopment of public transport, low fuel quality, and low emissions standards drive high levels of emissions from the transport sector. In MENA, the modal share is often heavily skewed toward the use of private cars; when public transportation is available, it has a low utilization rate in international comparison.

To support a shift in the modal share toward cleaner mobility, it is imperative to invest in public transport systems, while making them cleaner and supporting nonmotorized options such as walking and biking. Cairo’s continued expansion of its metro system has been effective in reducing PM pollution and other MENA cities have also invested heavily in their public transport infrastructure, moving the needle on improving air quality. Furthermore, it is also important to raise environmental standards, both for fuel quality and car technology, together with regular mandatory inspections.

4. Lenient industrial emissions rules and their weak enforcement. The industrial sector is characterized by low energy efficiency standards, also due to the low, subsidized prices for energy mentioned above. MENA is currently the only region, where not a single country has introduced or is actively planning to introduce either a carbon tax or an emission trading scheme.

Mandating stricter emissions caps, or technology requirements, together with proper enforcement and monitoring is crucial. Incentivizing firms to adopt more resource-efficient, end-of-pipe cleaning, and fuel-switching technologies are additional crucial means to reduce air pollution stemming from the industrial sector. A trading system for emissions could either target CO2 emissions, or air pollutants, such as the PM cap-and-trade system recently introduced in Gujarat, India. Such a system should target both the manufacturing industry as well as the power sector.

5. Weak solid waste management (SWM) is a major issue in MENA. Although the collection of municipal waste has room for improvement in many countries, it is mainly the disposal stage of SWM where the leakage occurs. Too often waste ends up in open dumps or informal landfills, where it ignites. Furthermore, processing capabilities are often limited, and equipment outdated, at least for the lower- and middle-income countries of the region.

Hence, enhancing the efficiency of disposal sites is critical to reducing leakage and the risk of self-ignition. To start, replacing or upgrading open dumps and uncontrolled landfills with engineered or sanitary landfills is a viable option. Going forward, recycling capabilities should be improved and the circularity of resources enhanced. For agricultural waste, the establishment of markets for crop residues and comprehensive information campaigns in Egypt showed that such measures can supplement the introduction of stricter waste-burning bans.

Kick-starting decoupling and banking on green investments hold the promise for MENA not only to improve environmental quality and health locally, and to mitigate climate change globally, but also to reap higher economic returns (including jobs). Moreover, decoupling now will prepare MENA economies better for a future in which much of the world will have decarbonized its economies, including its trade networks.

      
Kategorien: english

International financing of the Sustainable Development Goals

14. September 2021 - 20:05

By Homi Kharas, Meagan Dooley

      
Kategorien: english

Strengthening the global financial safety net by broadening systematic access to temporary foreign liquidity

14. September 2021 - 19:56

By Brahima Coulibaly, Eswar Prasad

      
Kategorien: english

Greening the African Continental Free Trade Area

13. September 2021 - 19:01

Trading under the African Continental Free Trade Area (AfCFTA) began earlier this year, with massive potential to boost inclusive economic growth and reduce inequality and poverty in Africa. Indeed, the World Bank predicts that 30 million Africans could be lifted out of extreme poverty, while incomes could rise by $450 billion by 2035. Exports could increase by $560 billion, while wages may increase by 10.3 percent and 9.8 percent for unskilled and skilled workers, respectively. The AfCFTA is not a panacea, though, and new complex challenges (e.g., COVID-19 and climate change) have exposed the vulnerability of social and economic systems across the world, highlighting their interconnectedness and emphasizing the need for collaboration around radical and sustainable solutions.

Thus, many experts believe that the AfCFTA can be an important tool as Africa looks to navigate these complex challenges. Indeed, in terms of addressing climate change-related challenges, the final negotiations over and implementation of the landmark trade agreement are creating opportunities to install and enforce new climate-friendly policies. For example, the AfCFTA can promote environmentally friendly protocols and e-commerce or advance the development of green value chains for minerals. Moreover, the momentum behind a climate-friendly AfCFTA can further bolster green industrialization and encourage investment in green infrastructure that will integrate climate risks and act as a buffer against current polluting infrastructure.

On September 20, the Brookings Africa Growth Initiative will co-host an event with the United Nations University Institute for Natural Resources in Africa in which panelists will explore the themes relevant to a “green” AfCFTA and debate whether the AfCFTA can be used as a tool to promote green strategies.

After the program, the panelists will take audience questions.

Viewers can submit questions for panelists by emailing events@brookings.edu or via Twitter @BrookingsGlobal by using #GreenAfCFTA.

      
Kategorien: english

How will the rise of the global middle class affect trade and consumption?

13. September 2021 - 11:47

By Homi Kharas, David Dollar

Around the world, the middle class is expanding at a rate we have never seen before in history. Homi Kharas, a senior fellow in the Center for Sustainable Development at Brookings, joins David Dollar in this episode to discuss how that global middle class is defined and where growth is concentrated. Kharas explains how preferences among the global middle class will affect production, trade, regional value chains, and efforts to address climate change for years to come.

DAVID DOLLAR: Hi, I’m David Dollar, host of the Brookings trade podcast, Dollar and Sense. Today, my guest is Homi Kharas, a senior fellow in the Center for Sustainable Development at Brookings. Homi’s recent research focuses on the rise of a global middle class. Our topic is how this global middle class affects consumption, production, and trade. So welcome to the show, Homi.

HOMI KHARAS: Thanks so much, David.

DOLLAR: So let’s start with how you define the middle class. What does it mean not just in terms of income, but in terms of lifestyle and consumption?

KHARAS: Let me start by saying that how I define the middle class and how I measure the middle class are two quite distinct concepts. So I’d like to talk about defining the middle class in terms of a group of people who basically make choices about their lives and about the economics of their lives.

If you think about people, if you are poor, you don’t really have the ability to make choices. You just don’t have the discretionary income to go around. You are struggling just to make ends meet. If you are rich, you don’t have to make choices because you can afford pretty much anything that you want. And if you are in between, then you are making choices. That’s how I think about the middle class, and it’s consistent with this idea that the middle class feels a responsibility for themselves. It’s a very individualistic kind of concept. They take responsibility for their own well-being and for their families. They invest in themselves. So it’s really a group of people that are making those choices.

So how do we measure it, which is a slightly different thing? I try to choose people who are living in households that are spending between $11 and $110 per day per capita in 2011 purchasing power parity terms. That’s a huge mouthful; let me just give a very quick explanation. Purchasing power parity allows us to compare the middle class size across different countries both spatially and over time, so it essentially adjusts for price differences. The levels of the thresholds are levels at which we start to see, at the bottom level, for example, people not worrying about falling into poverty. The probability of falling into poverty if you are in a household spending more than $11 a day is less than five percent over three years. So you are actually actively thinking about how do I choose to spend my money. At the top end, it’s a fairly rough estimate about when is it that people literally don’t have to worry too much about a budget constraint; they can basically choose whatever they want. Then last, I would just say the reason why I talk about these things in terms of per person per day is because of the very long literature on defining poverty in terms of an amount that you spend per day.

Finally, let me say I think about the middle class in terms of expenditures rather than incomes because all of us know that you might be a student with a very low level of income today, but if you are in college you have a high future expected income. So your spending might be much higher because you can afford to take out student loans, maybe your family is helping you, all kinds of other things. You are living a lifestyle which is significantly different from the lifestyle of somebody who is really poor.

DOLLAR: Homi, in your research you argue that there are going to be big shifts in the global middle class over the next 10 years. Traditionally it’s been a mostly rich country phenomenon, but now we are going to see big shifts. So, can you characterize those shifts?

KHARAS: It’s really interesting to me that there are two very distinct narratives about what’s happening to the middle class right now. In advanced economies, which is where the bulk of the middle class used to be constituted—and certainly the first billion people in the middle class were almost entirely in Europe, North America, and Japan—the narrative is about how the middle class is getting hollowed out. What people are not really focusing on is that there is an emerging middle class, largely in Asia, which is expanding at a rate that we have never seen before in history.

Read the full transcript

      
Kategorien: english

Responding to risks of COVID debt distress

10. September 2021 - 4:40

By Homi Kharas

      
Kategorien: english

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