Syndicate content

Global Economy

Global Investment Competitiveness: New Insights on FDI

Anabel Gonzalez's picture

It is easy enough to find data on flows of foreign direct investment (FDI). There are also plenty of anecdotes out there that purportedly encapsulate what businesses worldwide are thinking. It is far more difficult, however, to establish rigorous connections between global investment trends and individual investment decisions by international companies. In the World Bank Group’s newly published Global Investment Competitiveness Report 2017–2018, our team does just this, combining new survey data, rigorous econometric analysis, and extensive literature reviews to reveal what is going on behind the headline numbers.



Here are some of the key takeaways:
 

Measuring South Asia’s economy from outer space

Martin Rama's picture
New technologies offer an opportunity to strengthen economic measurement. Evening luminosity observed from satellites has been shown to be a good proxy for economic activity.
New technologies offer an opportunity to strengthen economic measurement. Evening luminosity observed from satellites has been shown to be a good proxy for economic activity.
Economic growth is a key concern for economists, political leaders, and the broader population.

But how confident are we that the available data on economic activity paints an accurate picture of a country’s performance?

Measuring Gross Domestic Product (GDP), the most standard measure of economic activity, is especially challenging in developing countries, where the informal sector is large and institutional constraints can be severe.

In addition, many countries only provide GDP measures annually and at the national level. Not surprisingly, GDP growth estimates are often met with skepticism.
 
New technologies offer an opportunity to strengthen economic measurement. Evening luminosity observed from satellites has been shown to be a good proxy for economic activity.

As shown in Figure 1, there is a strong correlation between nightlight intensity and GDP levels in South Asia: the higher the nightlight intensity on the horizontal axis, the stronger the economic activity on the vertical axis.
Figure 1 Nightlight intensity increases with economic activity
Figure 1 Nightlight intensity increases with economic activity

However, measuring nightlight is challenging and comes with a few caveats. Clouds, moonlight, and radiance from the sun can affect measurement accuracy, which then requires filtering and standardizing.

On the other hand, nighlight data has a lot advantages like being available in high-frequency and with a very high spatial resolution. In the latest edition of South Asia Economic Focus, we use variations in nightlight intensity to analyze economic trends and illustrate how this data can help predict GDP over time and across space.

Are you reaping the full benefits of the technology revolution?

Sara Sultan's picture

 
About 17 years ago, I began preparations for applying to colleges in America. One of the prerequisites to qualify for an undergraduate program was the Test of English as a Foreign Language (TOEFL), administered at testing centers around the world. I vividly remember calling the number given to see how I faired in the test, standing at an international call center booth on a sunny afternoon in Islamabad, Pakistan, my heart beating fast with anticipation. The call cost Rs.100/minute at the time ($1.05/min at the current rate). But despite the expensive price tag, the service delivered information I desperately needed.

Fast forward to the age of Google Voice, WhatsApp, Viber… You’ll agree that technology has not only advanced but services have become cheaper as well. Technology is entrenched in our everyday tasks—from communication to financial transactions, from expanding education to building resilience to natural disasters, and from informing transport planning to expanding energy to the unserved.

So, ask yourself: am I—a student, teacher, business owner, or a local government representative—reaping the full benefits of the greatest information and communication revolution in human history? With more than 40% of the world’s population with access to the internet and new users coming online every day, how can I help turn digital technologies into a development game changer? And how can the world close the global digital divide to make sure technology leaves no one behind?

How far are we on the road to sustainable mobility?

Nancy Vandycke's picture
You can now download the full report and explore the main findings on sum4all.org
The answer, unfortunately, is not very. The world is off track to achieving sustainable mobility. The demand for moving people and goods across the globe is increasingly met at the expense of future generations.
 
That is the verdict of the Global Mobility Report (GMR)—the first ever assessment of the global transport sector and the progress made toward achieving sustainable mobility.
 
This is the first major output of the Sustainable Mobility for All initiative (SuM4All), a global, multi-stakeholder partnership proposed last year at the United Nations (UN) Climate Action Summit with the purpose of realizing a future where mobility is sustainable. The release of this study puts a sector often overlooked by the international community squarely on the map as essential to address inclusion, health, climate change and global integration.
 
The report defines sustainable mobility in terms of four goals: universal access, efficiency, safety, and green mobility. If sustainable mobility is to be achieved, these four goals need to be pursued simultaneously.

Bicycles can boost Bangladesh's exports

Nadeem Rizwan's picture
Bangladesh is the 2nd largest non-EU exporter of bicycles to the EU and the 8th largest exporter overall
Bicycles are the largest export of Bangladesh’s engineering sector, contributing about 12 percent of engineering exports. Credit: World Bank
This blog is part of a series exploring new sources of competitiveness in Bangladesh

Did you know that Bangladesh is the 2nd largest non-EU exporter of bicycles to the EU and the 8th largest exporter overall?

Bicycles are the largest export of Bangladesh’s engineering sector, contributing about 12 percent of engineering exports.
 
This performance is in large part due to the high anti-dumping duty imposed by the EU against China.
 
Recently, the EU Parliament and the Council agreed on EU Commission’s proposal on a new methodology for calculating anti-dumping on imports from countries with significant market distortions or pervasive state influence on the economy.
 
This decision could mean that the 48.5 percent anti-dumping duty for Chinese bicycles may not end in 2018 as originally intended. China is disputing the EU’s dumping rules at the World Trade Organization.
 
As the global bicycle market is expected to grow to $34.9 billion by 2022, Bangladesh has an opportunity to diversify its exports beyond readymade garments. Presently, Bangladesh is the 2nd largest non-EU exporter of bicycles to the EU and the 8th largest exporter overall.
Bangladesh is the 2nd largest non-EU exporter of bicycles to the EU and the 8th largest exporter overall
EU27 bicycle imports in 2016 (Million $). Bangladesh is the 2nd largest non-EU exporter of bicycles to the EU and the 8th largest exporter overall. Source: UNComtrade through WITS

However, if the EU anti-dumping duty against China is reduced or lifted after 2018, Bangladesh’s price edge might be eroded.
 
Bangladeshi bicycle exporters estimate that without anti-dumping duties, Chinese bicycles could cost at least 10-20 percent less than Bangladeshi bicycles on European markets. And Chinese exporters can ship bicycles to the EU market with 35-50 percent shorter lead times.
 
So, how can Bangladeshi bicycles survive and grow?

Six reasons why Sri Lanka needs to boost its ailing private sector

Tatiana Nenova's picture
 Joe Qian / World Bank
A view of the business district in Colombo. Credit: Joe Qian / World Bank

Sri Lanka experienced strong growth at the end of its 26-year conflict. This was to be expected as post-war reconstruction tends to bring new hope and energy to a country.
 
And Sri Lanka has done well—5 percent growth is nothing to scoff at.  
 
However, Sri Lanka needs to create an environment that fosters private-sector growth and creates more and better jobs. To that end, the country should address these 6 pressing challenges:

1. The easy economic wins are almost exhausted

For a long time, the public-sector has been pouring funds into everything from infrastructure to healthcare. Unfortunately, Sri Lanka’s public sector is facing serious budget constraints. The island’s tax to growth domestic product (GDP) ratio is one of the lowest in the world, falling from 24.2% in 1978 to 10.1% in 2014. Sri Lanka should look for more sustainable sources of growth. As in many other countries, the answer lies with the private sector.
 
2. Sri Lanka has isolated itself from global and regional value chains 

Over the past decades, Sri Lanka has lost its trade competitiveness. As illustrated in the graph below, Sri Lanka outperformed Vietnam in the early 1990s on how much of its trade contributed to its growth domestic product. Vietnam has now overtaken Sri Lanka where trade has been harmed by high tariffs and para-tariffs and trade interventions on agriculture.


Sri Lanka dropped down by 14 notches to the 85th position out of 137 in the recent  Global Competitiveness Index.
           
3. The system inhibits private sector growth

Sri Lanka’s private sector is ailing. Sri Lankan companies are entrepreneurial and the country’s young people are smart, inquisitive, and dynamic. Yet, this does not translate into a vibrant private sector. Instead, public enterprises are the ones carrying the whole weight of development in this country.
 
The question is, why is the private sector not shouldering its burden of growth?


From the chart above, you can see how difficult it is to set up and operate a business in Sri Lanka. From paying taxes to enforcing contracts to registering property, entrepreneurs have the deck stacked against them.
 
Trading across borders is particularly challenging for Sri Lankan businesses. Trade facilitation is inadequate to the point of stunting growth and linkages to regional value chains. The chart explains just why Sri Lanka is considered one of the hardest countries in the world to run a trading business. Compare it to Singapore–you could even import a live tiger there without a problem.

Nearly all commodity price indexes rose in September – Pink Sheet

John Baffes's picture
Energy commodity prices increased more than 5 percent in September—the third consecutive monthly gain—led by a surge in oil prices, the World Bank’s Pink Sheet reported.

Non-energy prices rose modestly. Agriculture prices climbed a little over 1 percent, led by strong upturns in most edible oils and wheat.
The outlier to the trend of increases, beverage prices, fell 1 percent due to weakness in coffee prices. Fertilizer prices surged over 6 percent, led by a 16 percent jump in Urea.

Canada and the World Bank: Empowering women and girls is the best way to build a better world for all

Marie-Claude Bibeau's picture
A woman tends to plants in a nursery in Sri Lanka. © Lakshman Nadaraja/World Bank
A woman tends to plants in a nursery in Sri Lanka. © Lakshman Nadaraja/World Bank

We face global challenges on an unprecedented scale: climate change, natural disasters, poverty, water scarcity, food insecurity, global displacement, conflict and violence. These are not the kinds of challenges that will go away on their own—they feed off one another and flourish. The world is responding with the Sustainable Development Goals (SDG), which lay out a road map to building a more inclusive, peaceful and prosperous world—a better world.

Bangladesh corridor vital to India’s ‘Act East’ policy

Sanjay Kathuria's picture
India-Bangladesh land border crossing, Photo by Sanjay Kathuria
India-Bangladesh land border crossing. Credit: Sanjay Kathuria

Deepening connectivity and economic linkages between India and Bangladesh will be critical for the success of India’s ‘Act East’ policy.

Here are five priority areas that have the potential to change the economy of Northeast India:

1. Transport Connectivity

After 1947, Northeast (NE) India has had to access the rest of India largely via the “Chicken’s Neck” near Siliguri, greatly increasing travel times. Traders travel 1600 km from Agartala (Tripura) to Kolkata (West Bengal) via Siliguri to access Kolkata port. Instead, they can travel less than 600 kms to reach the same destination via Bangladesh, or even better, travel only 200 km to access the nearby port of Chittagong in Bangladesh.

This is set to change as close cooperation between Bangladesh and India (including various ongoing initiatives such as the transshipment of Indian goods through Bangladesh’s Ashuganj port to Northeast India, expanding of rail links within Northeast India and between the two countries, the BBIN Motor Vehicles Agreement) can dramatically reduce the cost of transport between Northeast India and the rest of India.

The resultant decline in prices of goods and services can have a strong impact on consumer welfare and poverty reduction in the Northeast. Such cooperation also opens up several additional possibilities of linking India with ASEAN via Myanmar.

Moving forward, expanding direct connectivity between NE India and the rest of India via Bangladesh, while giving Bangladesh similar access to Nepal and Bhutan via India, is critical.

2. Digital Connectivity

Broadband connectivity of 10 gbps is now being provided from Bangladesh’s Cox’s Bazar to Tripura and beyond, to help improve the speed and reliability of internet access in NE India. Bangladesh has the capacity to provide more.


Pages