A vibrant stratum of small and medium-sized enterprises (SMEs) is critical for the growth and development of Asian economies. These enterprises generate employment, contribute to investment, participate in value chains, and support innovation. SMEs that seek to sustain and grow their operations, however, face a variety of constraints, many of which are directly related to size. These "size-induced market failures" create a role for public policy intervention. This book focuses on the market failures encountered by enterprises in the key areas of technology and innovation, credit and finance, education and skills, and market access. Obstacles to SME participation in the rapidly expanding regional and global value chains are also examined. The chapter authors examine national and multicountry experiences in South, East, and Southeast Asia.
This paper studies the possibility of using financial regulation that prohibits the use of money substitutes as a tool for mitigating the adverse effects of deviations from the Friedman rule. When inflation is not too high regulation aimed at eliminating money substitutes improves welfare by economizing on transaction costs. The gains from regulation depend on the distribution of income and the level of direct taxation. The area under the demand for money curve is equal to the welfare cost of inflation only when there are no direct taxes and no proportional intermediation cost: otherwise, the area under the demand curve overstates the welfare cost of inflation when money substitutes are not important and understates the welfare cost when money substitutes are important.
This paper develops a novel methodology to measure the quantity of jobs and value of wages embodied in exports for a large number of countries and sectors for intermittent years between 1995 and 2011. The resulting Labor Content of Exports database allows the examination of the direct contribution of labor to exports as well as the indirect contribution via other sectors of the economy for skilled and unskilled labor. The analysis of the new data sets documents several new findings. First, the global share of labor value added in exports has been declining globally since 1995, but it has increased in low-income countries. Second, in line with the standard Hecksher-Ohlin trade model, the composition of labor directly contained in exports is skewed toward skilled labor in high-income countries relative to developing countries. However, that is not the case for the indirect labor content of exports. Third, manufacturing exports are a key source of labor demand in other sectors, especially in middle- and low-income countries. And the majority of the indirect demand for labor spurred by exports is in services sectors, whose workers are the largest beneficiaries of exporting activities globally. Fourth, differences in the labor value added in exports share across developing countries appears to be driven more by differences in the composition of exports rather than in sector labor intensities. Finally, average wages typically increase rapidly enough with the process of economic development to more than compensate the loss in jobs per unit of exports. The paper also includes the necessary information to build the Labor Content of Exports database from the original raw data, including stata do-files and matlab files, as well as descriptions of the variables in the data set.
Effective pension management, financial education curricula in schools, internationally comparable data on financial literacy and the evaluation of the effectiveness of financial education programs are highlighted in this book. Surveys show that financial literacy levels are typically low around the world, despite the widening access to financial services and the increasing financial risks borne by households in many countries. This suggests that there will be mounting challenges for households and SMEs to invest wisely and effectively as societies age and governments shift away from defined benefit to defined contribution pension schemes. Individuals will increasingly have to make complex financial decisions to plan for their retirement and for a range of foreseen and unforeseen expenditures. All of these developments suggest that financial education should be part of a lifetime process that starts at an early age and is pursued throughout adulthood.
Vietnam's fiscal position has deteriorated rapidly in recent years. For example, its budget deficit in 2015 increased 14 per cent to reach 256 trillion dongs (US$11.47 billion), equivalent to 6.1 per cent of its GDP (CafeF, 2016). The country's increasingly precarious fiscal position has been identified by experts as an urgent matter that can generate potential risks for its long-term macro-economic stability (see, for example, Financial Times, 2016; VnExpress, 2015b). It also poses a considerable challenge for Vietnam's new government in achieving socio-economic targets set by the recent twelfth congress of the Communist Party of Vietnam (CPV). If the fiscal imbalance persists or worsens, it will generate serious economic, political and strategic implications for Vietnam. Solving or mitigating the problem, however, will require not only sound economic policies but also political determination to embrace challenging reforms on the part of the CPV. This essay seeks to examine this particular problem and its implications. It provides first an overview of Vietnam's worsening fiscal position and its underlying reasons, and then an analysis of the economic, political and strategic implications that can be expected in the coming years.
This publication reviews recent developments in East Asian local currency bond markets along with the outlook, risks, and policy options. It covers the 10 members of the Association of Southeast Asian Nations and the People's Republic of China; Hong Kong, China; and the Republic of Korea.
In December 2015, compared to the same month of the previous year 2014, the volume of total deposits increased by 24.8% (3 080 mln GEL), while the volume of total loans to the national economy increased by 23.5% (3 074 mln GEL). Taking exchange rates into consideration, the growth rate of the deposits is 5.4% and the growth rate of the loans is 5.8%. In this period, the average interest rate on deposits denominated in foreign currency declined by 0.6 percentage point and on deposits denominated in the national currency increased by 1.1% percentage. Regarding loans, interest rates on loans denominated in foreign currencies declined by 1.1 percentage point and on loans denominated in GEL declined by 0.6% point.
Sharing ASEAN is a regular publication of the Center for International Relations and Strategic Studies (CIRSS) of the Foreign Service Institute. It contains updates on ASEAN's progress and provides information on the benefits, contribution, and participation of the Philippines in ASEAN. Sharing ASEAN promotes bringing ASEAN closer to the people to realize a people centered Community.
This report gives an overview of the key results from the analysis of the data collected in a survey conducted in October and November 2012 by the Austrian Institute for small and medium enterprise (SME) research on behalf of the World Bank center for financial reporting reform (CFRR). The survey was carried out using an online questionnaire and captures data from more than 780 SMEs that are representative of the Austrian SME sector. The primary purpose of this report is to assist the accounting and auditing profession, policy makers, and users of financial information in understanding the value and the constraints of SMEs' financial reporting practices. It also feeds into a broader CFRR study on corporate financial reporting reform in Austria. The report presents the results of the survey grouped by topical areas as follows: accounting practices in Austrian SMEs; auditing financial statements; SME financing; and financial reporting and access to finance.
In Croatia, initial steps to reform the railway sector date back to the middle of the first decade of the 2000s, with the formation of Croatian railways as a holding company. To help with further reforms of the Croatian railway sector, over the period 2011-2013, the World Bank was engaged in dialogue with the Croatian Government and the Croatian railway companies which resulted in a Croatian railway policy note. The poverty and social impact analysis (PSIA) is an analysis of the intended and unintended consequences of policy reforms on the wellbeing or welfare of different social groups, with particular focus on the poor and vulnerable. PSIA offers a set of analytical and process tools that: (a) determine distributional impacts to improve the analytical underpinnings of policy making; and (b) engage appropriate stakeholders in the policy-making process. The report is divided into following sections: first section gives executive summary. The introduction provides information on the economic situation in Croatia, including unemployment rates and pensions, the situation of the railway sector, and data on the restructuring process of the Croatian railways companies in second section. The third section contains the results obtained from the group discussions and in-depth interviews which are divided into four parts: the circumstances upon leaving the railway companies, after leaving, transferring to a new workplace, and the broader impacts on the community, including the impacts of closed and reduced lines. The last part of the section contains recommendations based on the obtained results.
This report by the Independent Evaluation Group (IEG) summarizes the experiences of and draws lessons from the country program evaluations of four natural resource-rich countries: the Plurinational State of Bolivia, Kazakhstan, Mongolia, and Zambia. It concludes that although the challenges identified in these countries are not unique, they manifest themselves with particular intensity in three closely interrelated areas that need to be defined and structured as a coherent strategy: (i) management of revenues from an exhaustible resource; (ii) growth and employment in the non-extractive sectors, and (iii) inclusive growth and reduction of poverty. Overall, looking at the four resource-rich countries in this evaluation, one does not see the World Bank Group as having a consistent framework for engagement, driven by the defining characteristics of these countries—their rich endowment with non-renewable natural resources and dependence on revenues from their exploitation. Each of the four stories evolved in a unique way that depended on how the country teams decided to react to differing country circumstances. The main challenge for the Bank Group in these countries today is how to stay relevant and competitive, as its value proposition is no longer its financial resources, but its knowledge and global experience, which may call for a more modest scope of interventions while keeping the focus on key challenges.
Inequality in Indonesia is rising rapidly. During the 1997-98 Asian financial crisis, poverty rosesharply, while the Gini measure of inequality fell, as the richest were the hardest hit. Since then, the Gini has increased from 30 points in 2000 to 41 points in 2014, its highest recorded level. In 2002, the richest 10 percent of Indonesians consumed as much as the poorest 42 percent combined; by 2014, they consumed as much as the poorest 54 percent. Even this is likely to be understated, as household surveys often miss the rich. Indonesias level of inequality is now becoming high and climbing faster than most of its East Asian neighbors.
The World Bank Group's investment climate project conducted a survey of foreign investors in the Kyrgyz Republic - both those currently operating and those that have terminated their operations for various reasons. The purpose of the survey was to assess selected aspects of the investment policy and legal environment in place in the Kyrgyz Republic, so as to determine whether the current regulations are investment-conducive or otherwise. The following aspects were studied as part of this survey: reasons for selecting a country for investing, ease of market entry, investor confidence, and protection in running a business, investor incentives and market exit. This report presents the analysis of the results of the survey. It consists of six sections, five of which discuss the results of each of the assessed aspects of the investment policy. The sixth section presents some demographics of the survey.
Palestinians are getting poorer on average for the third year in a row. As evidenced in previous World Bank reports, the competitiveness of the Palestinian economy has been progressively eroding since the signing of the Oslo accords, in particular its industry and agriculture. Even though donor aid had increased government-funded services and fueled consumption-driven growth during 2007 to 2011, this growth model has proved unsustainable. Donor support has significantly declined in recent years and, in any case, aid cannot sustainably make up for inadequate private investment. Thus, growth has started to slow since 2012 and the Palestinian economy contracted in 2014 following the Gaza war. In early 2015, GDP was still lower than it was a year ago. Due to population growth, real GDP per capita has been shrinking since 2013. Unemployment remains high, particularly amongst Gaza's youth where it exceeds 60 percent, and 25 percent of Palestinians currently live in poverty. Against the backdrop of weak economic growth, reduced donor aid, and temporary suspension of revenue payments by the Government of Israel (GoI), the Palestinian Authority's reform efforts have not been able to prevent another year with a financing gap. The persistence of this situation could potentially lead to political and social unrest. In short, the status quo is not sustainable and downside risks of further conflict and social unrest are high.
Over the past twenty years, Uganda's population density has been increasing rapidly, placing significant pressure on the use of land. Uganda now has a population density of 194 persons per square kilometer of arable land, compared to 80 in Kenya and 116 in Ghana. At present, the majority of Uganda's population still lives in rural areas, where the main source of livelihood is agriculture. However, the proportion of the population living in urban areas has increased significantly and will continue to increase into the future, with urban centers being the main driver of economic growth and transformation into higher value added activities. The highest rates of growth in population density are recorded in Uganda's central region. It is essential that Uganda changes the manner in which it manages its land if the majority of its population is to achieve a higher level of prosperity through the healthy transformation of the agricultural sector and a shift towards higher value, more productive economic activities more generally. Through the formulation and implementation of smart policies, Uganda can ensure that its land serves as a more productive asset that facilitates positive transformation and a diversification of the economic base. The achievement of these goals will require a comprehensive set of actions that will promote security of land tenure and reduce the rate of occurrence of conflicts and disputes caused by overlapping rights; promote the healthy development of rental markets for land; and strengthen the capacities of institutions responsible for the management of land administration. Failure to unlock the potential of land may result in a deceleration of growth and lack of progress towards prosperity. In addition, rather than driving equitable economic growth, the process of urbanization will result in dysfunctionality in the form of the proliferation of slums; increased congestion; and a deterioration in the quality of, or a failure to develop, infrastructure due to an escalation in the costs of construction and payment of compensation. Implementation of relevant up to date laws and policies has to be accelerated to make land in Uganda genuinely secure, transferable, marketable and supportive of economic development.
