The impact of COVID-19 on the Russian economy was undoubtedly enormous, clearly, negatively. The GDP of the Russian economy shrank 3% in 2020, the sharpest contraction after the previous economic disaster in 2008. The two economic downturns resemble each other. They show that resource dependent economies are susceptible to sudden declines in raw material prices, where they resort to too much. It is not anew that fossil fuel exports, including oil and natural gas, serve as a linchpin for the Russian economic system. Exports of the energy resources constitute a whopping 60% of all goods exports while accounting for more than a major bulk of government revenues. Excessive economic dependence on the resource sector has been a perennial concern, and the ominous premonition was correct again. The Russian economy contracted 8.5% in the second quarter of 2020 when the Ural oil price plummeted to $18 per barrel, reminiscent of the 2008 economic recession sparked by the sudden collapse of the oil price by more than 70% of its peak value.
The COVID-19 pandemic is leading to a dramatic roll-back of economic progress across Southeast Asia. While the region has managed to contain the spread of the virus better than most others, the economic impact on the region has been devastating. Southeast Asia is highly integrated into the global economy, both with regard to trade and international travel. Since international travel stopped almost entirely in March, the tourism and business travel sectors have experienced unprecedented contraction. Many small businesses have closed permanently as they cannot survive the economic losses brought on by COVID-19 lockdowns and travel restrictions. With each passing month, tens of millions more workers become at risk of sliding into poverty, including many in the middle class. As the pandemic drags on, temporary job losses have become permanent, and household incomes have plummeted. Governments across Southeast Asia have responded with an array of new programs to help the people and small businesses most affected by the pandemic. Many governments have expanded their social protection schemes or introduced new programs so that they can provide additional income, temporarily reduce expenses, or delay the required payments of people who have lost their work and income. For small businesses, governments have introduced new subsidized loan programs, tax breaks, debt repayment holidays, and incentives for keeping employees on the payroll. These crucial programs will be essential for economic recovery, and the prevention of large-scale increases in poverty and inequality. One critical challenge for governments, however, is the lack of timely information on the economic and social impacts of the pandemic. Across Asia, governments have had to make major decisions about COVID-19 economic relief measures with little reliable and up-to-date information. As large amounts of public funds are being mobilized to help address the unprecedented crisis, governments urgently need ground-level data on how small businesses and workers are being affected, and how they are coping. This information is essential so that governments can target their programs to achieve maximum benefit. To address the need for accurate data on how COVID-19 is disrupting micro and small enterprises, vulnerable workers, the informal economy, and heavily affected sectors, The Asia Foundation (the Foundation) and its partners are conducting a series of national surveys and case studies in six Southeast Asian countries: Cambodia, the Lao Peoples' Democratic Republic (Lao PDR), Malaysia, Myanmar, Thailand, and Timor-Leste. These surveys and cases studies, which are being conducted in partnership with the Foundation's local research partners, are largely carried out via telephone calls and Internet platforms, but in some cases, face-to-face.1 To determine the key survey questions for all six countries, and make them as locally useful as possible, in each country, the Foundation's office and partners consulted with national government officials and policy-makers. The Foundation's local research partners then finalized and conducted the surveys and case studies, analyzed the data, and collaborated with the Foundation in writing up the results.
The Kurdistan Region of Iraq (KRI) is a constitutionally recognized semiautonomous region in northern Iraq. Its government, the Kurdistan Regional Government (KRG), based in Erbil, has the right, under the Iraqi constitution of 2005, to exercise legislative, executive, and judicial powers according to the constitution, except in what is listed therein as exclusive powers of the federal authorities. The Iraqi constitution defines the Kurdistan Region as a federal entity of Iraq. KRG has a parliamentary democracy with a regional assembly that consists of 111 seats. KRI has been largely immune to the insecurity and conflict witnessed elsewhere in Iraq, especially following the 2003 Iraq War. KRG is facing a wide range of immediate and medium to longer-term challenges that are intrinsically linked to the overall macroeconomic situation of Iraq as well as the regional and global environment. The immediate challenge consists in coping with (a) the deep fiscal crisis, and (b) the security and social problems brought about by the conflict with the Islamic State in Iraq and Syria (ISIS) group and the resulting influx of Syrian refugees and Iraqi Internally Displaced Persons (IDPs). These challenges are clearly immediate priorities for the KRG, and will bear significant repercussions nationally and internationally if inadequately addressed. The medium to longer-term challenges pertain to moderating dependence on the oil sector and transforming the KRI economy into a diversified one that supports private sector-led economic growth and job creation in a sustainable manner.
Analysis of Sri Lanka's recent progress in reducing poverty and inequality is directly relevant to the new government's development agenda. The newly sworn-in president ran for election on a platform that featured, among other goals, inclusive growth and support to the agricultural sector. The pursuit of these and other goals of the new administration can be informed by a fuller understanding of recent developments in household living standards across the country. Yet the World Bank's most recent poverty assessment in Sri Lanka, covering the period from 1990 to 2002, was published a decade ago. Since then, domestic economic growth, the end of the civil conflict and fluctuations in global markets has led to substantial changes in Sri Lanka's economic environment. To inform the new government's development policies, this report examines five topics related to recent developments in poverty and welfare. Sections two through five of the report focus on: (i) trends in poverty, welfare, and inequality since 2002, (ii) labor market outcomes associated with the observed reduction in poverty, (iii) four potential causes of this poverty reduction, (iv) the state of poverty and inequality in 2012/13, and (v) the role of social protection in reducing poverty. Section six concludes by pointing out future implications and remaining knowledge gaps to continue to reduce poverty and improve living standards. This analysis draws mainly on data from the 2002, 2006-07, 2009-10, and 2012-13 rounds of the Household Income and Expenditure Survey, supplemented by annual rounds of the labor force survey from 2002 to 2012. Since the surveys could not be conducted in parts of the Northern and Eastern provinces before 2011 due to the civil conflict, their geographical coverage varies from year to year. To ensure comparability, all historical trends presented in this report correspond to the same geographic area. With the exception of figures that are based solely on 2012-13 data, the figures exclude Northern and Eastern provinces, which account for about 12.9 percent of the total population. A more detailed description of the data is provided in appendix one.
Afghanistan is a deeply fragile and conflict affected state. It has been in almost constant conflict for over 35 years since the Soviet invasion of 1979. Today the country is at a crossroads in its development with economic growth down sharply and poverty incidence stubbornly high. Afghanistan faces tremendous development challenges. Gross domestic product (GDP) per-capita is among the lowest in the world, poverty is deep and widespread, and social indicators are still at very low levels. The new government has declared its commitment to address Afghanistan's development challenges, through its paper realizing self-reliance: commitments to reforms and renewed partnership presented at the London conference in December 2014. The purpose of this systematic country diagnostic (SCD) is to provide an evidence-based diagnostic within an objective framework to help in the identification of development priorities. Countries in conflict often face rapidly evolving circumstances and flexibility to adjust quickly is a necessity. The SCD is thus intended to set forth a broad and flexible framework for thinking about choices, prioritization, and sequencing.
This paper re-examines the development implications of international migration focusing on two issues: how the costs and benefits of migration change over time, and the significance of South-South migration for development. First, the analysis finds that although greater migration could push down the wages of native workers of advanced countries in the short run, these wages eventually recover. This pattern would be mostly caused by the beneficial effect of additional labor on the real returns on capital and fostering faster capital formation. Additional South-North migration could favor capital income recipients and reduces labor income in host regions in the short run. In contrast, in sending countries, capital owners could experience lower incomes while wages rise. Globally, the welfare gains of new migrants could be expected to exceed the losses of old migrants by a wide margin. The remaining natives in sending countries could enjoy a net increase in remittances as well as an increase in labor income, although income from capital might decline. Second, in a hypothetical scenario with lower South-South migration, the implied losses of remittance income could lead to substantially lower welfare in developing countries. Although the wage differentials among developing countries tend to be smaller relative to their wage differentials with high-income countries, South-South migrants make substantial contributions to remittances.
This paper examines the earnings premiums associated with different types of employment in 73 countries. Workers are divided into four categories: non-professional own-account workers, employers and own-account professionals, informal wage employees, and formal wage employees. Approximately half of the workers in low-income countries are non-professional own-account workers and the majority of the rest are informal employees. Fewer than 10 percent are formal employees, and only 2 percent of workers in low-income countries are employers or own-account professionals. As per capita gross domestic product increases, there are large net shifts from non-professional own-account work into formal wage employment. Across all regions and income levels, non-professional own-account workers and informal wage employees face an earnings penalty compared with formal wage employees. But in low-income countries this earnings penalty is small, and non-professional own-account workers earn a positive premium relative to all wage employees. Earnings penalties for non-professional own-account workers tend to increase with gross domestic product and are largest for female workers in high-income countries. Men earn greater premiums than women for being employers or own-account professionals. These results are consistent with compensating wage differentials and firm quasi-rents playing important roles in explaining cross-country variation in earnings penalties, and raise questions about the extent to which the unskilled self-employed are rationed out of formal wage work in low-income countries.
The expansion of international trade has been essential to development and poverty reduction. Todays economy is unquestionable global. Trade as a proportion of global GDP has approximately doubled since 1975. Markets for goods and services have become increasingly integrated through a fall in trade barriers, with technology helping drive trade costs lower. But trade is not an end in itself. People measure the value of trade by the extent to which it delivers better livelihoods, through higher incomes, greater choice, and a more sustainable future, among other benefits. For the extreme poor living on less than $1.25 a day, the central value of trade is its potential to help transform their lives and those of their families. In this way, there is no doubt that the integration of global markets through trade openness has made a critical contribution to poverty reduction. The number of people living in extreme poverty around the world has fallen by around one billion since 1990. Without the growing participation of developing countries in international trade, and sustained efforts to lower barriers to the integration of markets, it is hard to see how this reduction could have been achieved.
Social protection schemes can contribute to poverty reduction objectives pursued through current community-driven development (CDD) platforms in Myanmar by building household and community resilience. In turn, existing CDD platforms provide viable options to promote a transition to government-led social protection delivery. Making infrastructure development more pro-poor andproviding communities with an expanded menu of options, including social protection schemes, can be a first step in enhancing the poverty reduction potential of CDD platforms.
This paper examines the impact of labor migration from a welfare and social development perspective. Rather than focusing on regulatory and legal aspects determining migration, this note centers on the impacts of migration on the domestic welfare of households in the Kyrgyz Republic. The profiling of labor migration and identification of knowledge gaps are used to inform the development of strategies for more effective and sustainable welfare impacts from labor migration and remittances.
Relative to other comparable income and health spending countries, Bulgaria has more physicians per capita. Bulgaria's physician to population ratio increased from 2.5 in 1980 to 3.8 physicians per 1000 population in 2011. The physician to population ratio is comparable to the EU-12 average of 3.8 physicians per 1000 population in 2012 but is higher than the EU-15 average of 3.1 physicians per 1000 population in 2012. Bulgaria has achieved significant improvements in health outcomes over time but is still falling behind most EU countries on key health indicators. Infant mortality decreased from 24.5 in 1980 to 10.5 per 1,000 live births in 2012 (Figure 5). Infant mortality in Bulgaria is slightly lower relative to other comparable income and health spending countries. Despite the significant reduction, however, Bulgaria's infant mortality rate is still more than three times higher than the EU-15 average of 3.2 infant deaths per 1000 live births and almost twice as high as the EU-12 average of 5.5 infant deaths per 1000 live births. More significant improvements were achieved in reducing maternal mortality, which fell from 24 deaths per 100,000 live births in 1990 to 8 deaths per 100,000 live births in 2010. The maternal mortality ratio in Bulgaria is low compared to the global averages relative to income and health spending. Bulgaria has surpassed the EU-12 average of 11.3 deaths per 100,000 live births and is approaching the EU-15 average of 7.6 deaths per 100,000 live births.
Policy makers in developing countries, including India, are increasingly sensitive to the links between spatial transformation and economic development. However, the empirical knowledge available on those links is most often insufficient to guide policy decisions. There is no shortage of case studies on urban agglomerations of different sorts, or of benchmarking exercises for states and districts, but more systematic evidence is scarce. To help address this gap, this paper combines insights from poverty analysis and urban economics, and develops a methodology to assess spatial performance with a high degree of granularity. This methodology is applied to India, where individual household survey records are mapped to "places" (both rural and urban) below the district level. The analysis disentangles the contributions household characteristics and locations make to labor earnings, proxied by nominal household expenditure per capita. The paper shows that one-third of the variation in predicted labor earnings is explained by the locations where households reside and by the interaction between these locations and household characteristics such as education. In parallel, this methodology provides a workable metric to describe spatial productivity patterns across India. The paper shows that there is a gradation of spatial performance across places, rather than a clear rural-urban divide. It also finds that distance matters: places with higher productivity are close to each other, but some spread their prosperity over much broader areas than others. Using the spatial distribution of this metric across India, the paper further classifies places at below-district level into four tiers: top locations, their catchment areas, average locations, and bottom locations. The analysis finds that some small cities are among the top locations, while some large cities are not. It also finds that top locations and their catchment areas include many high-performing rural places, and are not necessarily more unequal than average locations. Preliminary analysis reveals that these top locations and their catchment areas display characteristics that are generally believed to drive agglomeration economies and contribute to faster productivity growth.
The extractive industries (EI) sector occupies an outsize space in the economies of many developing countries. Economists, public finance professionals, and policy makers working in such countries are frequently confronted with issues that require an in-depth understanding of the sector. The objective of this volume is to provide a concise overview of EI-related topics these professionals are likely to encounter. The volume provides an overview of issues central to EI economics; discusses key components of the sector's governance, policy, and institutional frameworks; and identifies the public sector's EI-related financing obligations. Its discussion of EI economics covers the valuation of subsoil assets, the economic interpretation of ore, and the structure of energy and mineral markets. The volume maps the responsibilities of relevant government entities and outlines the characteristics of the EI sector's legal and regulatory frameworks. Specific key functions of the sector are briefly discussed, as are the financial structures that underpin environmental and social safeguards; investment of public revenues generated from oil, gas, or minerals; as well as extractive-based economic diversification. The authors hope that decision makers in ministries of finance, international organizations, and other relevant entities will find the study useful to their understanding and analysis of the EI sector.
What are the socioeconomic impacts of resource abundance? Are these effects different at the national and local levels? How could resource booms benefit (or harm) local communities? This paper reviews a vast literature examining these questions, with an emphasis on empirical works. First, the evidence and theoretical arguments behind the so-called resource curse, and other impacts at the country level, are reviewed. This cross-country literature highlights the importance of institutions. Then, a simple analytical framework is developed to understand how resource booms could impact local communities, and the available empirical evidence is examined. This emerging literature exploits within-country variation and is opening new ways to think about the relation between natural resources and economic development. The main message is that others factors, such as market mechanisms and local spillovers, are also relevant for understanding the impact of resource abundance. Finally, the paper discusses issues related to fiscal decentralization and provides ideas for future research.
Using manufacturing plant-level census data, this paper demonstrates that minimum wage increases in Indonesia reduced gender wage gaps among production workers, with heterogeneous impacts by level of education and position of the firm in the wage distribution. Paradoxically, educated women appear to have benefitted the most, particularly in the lower half of the firm average earnings distribution. By contrast, women who did not complete primary education did not benefit on average, and even lost ground in the upper end of the earnings distribution. Minimum wage increases were thus associated with exacerbated gender pay gaps among the least educated, and reduced gender gaps among the best educated production workers. Unconditional quantile regression analysis attests to wage compression and lighthouse effects. Changes in relative employment prospects were limited.
