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The purpose of this paper is to assess Madagascar's competitiveness in recent years, using both price and nonprice indicators and an exchange rate assessment of the currency. We estimate the distance between the equilibrium and the actual real exchange rates using three methods: the macroeconomic balance approach, the external sustainability approach, and the reduced-form equilibrium real exchange rate approach. These methods suggest that in the medium term the real exchange rate is only slightly overvalued. We also carry out a comparative analysis of nonprice indicators and find that Madagasc

"This book takes stock of Madagascar's first 10 years of decentralization. As it happened in many other developing countries, particularly in Africa, Madagascar's decentralization process has seen reversals, uncertainties and lack of clarity all along. This explains why Madagascar, despite the experience with decentralization, remains a highly centralized country with only about 3-4 percent of expenditures spent below the center and with very few prerogatives decentralized to the local level."--Jacket

Cover -- CONTENTS -- POVERTY IN MADAGASCAR -- A. Poverty -- B. Who are the Poor in Madagascar? -- C. Growth -- D. Conclusions -- REFERENCES -- BOX -- 1. Different Measures of Poverty -- FIGURES -- 1. Madagascar and Sub-Saharan Africa (SSA): Poverty Data -- 2. Indicators in Urban and Rural Areas -- 3. Health Indicators -- 4. Madagascar and Sub-Saharan Africa (SSA): Economic Growth -- TAX REVENUE MOBILIZATION IN MADAGASCAR -- A. Background -- B. Diagnostics: How Low is Madagascar's Tax Ratio and Why? -- C. Strategy for Tax Revenue Mobilization -- D. Lessons from Other Countries' Experience -- REFERENCES -- FIGURES -- 1. Tax Revenue in Selected SSA Countries, 2005-13 -- 2. Tax Ratios in Madagascar and Other Low-Income Countries: 2007-13 -- 3. Madagascar's Tax Revenue, 1995-2013 -- 4. Tax Gaps in Selected Low-Income -- 5. Tax Revenue, Taxable Capacity and Tax -- 6. Performance of Major Tax Categories -- BOXES -- 1. Tax Potential: A Comparison of Two Empirical Approaches -- 2. Madagascar's 2008 Tax Reform -- SUMMARY OF THE TAX SYSTEM -- EXCHANGE RATE ASSESSMENT -- A. Background -- B. Exchange Rate Assessment Models -- C. Survey Measures of Competitiveness -- FIGURES -- 1. Exchange Rates and Reserves -- 2. Current Account Balance Decomposition (CGER) -- 3. Current Account Balance Decomposition (EBA-Lite) -- 4. EER Fair Value Estimates -- 5. Competitiveness Indicators -- TABLE -- 2A. Doing Business Indicators for Madagascar -- EXCHANGE RATE PASS-THROUGH IN MADAGASCAR -- A. Background -- B. Literature and Methodology -- C. Results -- D. Conclusions -- E. Annex -- REFERENCES -- FIGURES -- 1. CPI and NEER -- A1. Impulse Response for Simple VAR Specification -- A2. Impulse Response for VAR Specification with Output Gap and Oil Prices -- A3. Impulse Response for VAR Specification with M0 and Rice Harvest

KEY ISSUESContext: Madagascar is one of the poorest countries in the world. Weak economic growth has contributed to persistent and increasing poverty with deteriorating social indicators. In a fragile environment, the uncertainty linked to political instability, weak institutions, and weak governance has eroded the foundation for solid economic growth, with short-term rent-seeking having taken precedence over longer-term nation building.Outlook and Risks: The authorities are at a crossroads. A well-prioritized medium-term economic program that is implemented concertedly would increase growth a