Addition by Subtraction: How Diasporas Can Boost Home-Country Growth


Pritha Mitra-blogpicBy Pritha Mitra

Version in عربي (Arabic)

Every year, millions of people leave their countries of birth in search of better opportunities abroad. Often, these migrants are among the most talented workers in their home countries. At first glance, this is a loss for the home countries, which invested considerable time and money in educating and developing these people, only to watch them leave. But look again.

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Capacity Development in Africa: the Faces behind the Numbers


By Carla Grasso CGrasso

Versions in:  عربي (Arabic),  中文 (Chinese), Français (French),  日本語 (Japanese), Português (Portuguese), Русский (Russian), and Español (Spanish)

If there’s one thing all economists can agree on, it’s the importance of numbers. Without good data, it is difficult to assess how an economy is performing and formulate smart policies that help improve lives. Continue reading

Competitiveness in Sub-Saharan Africa: Time to Move Ahead


Antoinette Sayeh2

By Antoinette Sayeh

(Versions in EspañolFrançais, and Português)

The sub-Saharan Africa region is facing severe shocks associated with the steep decline in commodity prices and tightening global financial conditions. Against this background, it’s a good time to look back at the region’s recent growth experience and examine the relationship between growth rates and competitiveness. The extent to which sub-Saharan African companies are able to compete against their foreign competitors (that is, the extent to which they are competitive) could indeed play a role in sustaining growth going ahead.

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A Glimpse of the Future


Jeff Hayden altby Jeff Hayden

(Version in عربي)

One of my favorite car trips in the United States heads east out of Los Angeles and runs through the windswept San Gorgonio Pass, gateway to the Mojave and Sonoran deserts. I’m a fan of the drive on Interstate 10 not only because it affords access to a dramatic desert landscape but also because the funnel-like pass at San Gorgonio prompts thoughts about the planet’s energy future.

The pass—one of the windiest places in the United States—is home to the San Gorgonio Pass Wind Farm, an array of more than 4,000 turbines that harness wind to produce “clean”—non-fossil-fuel-based—energy. It’s a stunning sight, and I always wonder, is this what a sustainable energy future looks like? Can thousands of turbines sprawled over the landscape be part of society’s answer to a most pressing question: how to balance the massive need for energy to power economic growth and development while addressing our urgent need to sharply reduce carbon emissions, a chief contributor to climate change.

The question fuels intense debate—one that has become increasingly polarized and that frequently puts growth and sustainable energy in opposition. But are the two—growth and a more sustainable mix of energy sources—really enemies? Can a more benign mix of energy sources and technology bring power to the 1.3 billion people who don’t have it?

These questions, along with December’s United Nations climate summit in Paris, provided the inspiration for this issue of F&D.

The answers are complex but reassuring. Nicholas Stern of the London School of Economics argues that the twin challenges of fighting poverty and climate change are not mutually exclusive. And the International Labour Organization’s Peter Poschen says we need not choose between green and jobs.

Continuing with the energy theme, IMF economist Ian Parry looks at the practical problems of setting a price for carbon that reflects its true costs. And F&D analyzes the four major declines in oil prices in the past 30 years and finds an eerie similarity today to the prolonged slump that began in 1986.

On other topics, Paul Collier and coauthors look at the costs of treating and preventing HIV/AIDS in Africa. This issue of F&D also examines the high penalty countries pay when they default on sovereign debt, skewering the conventional wisdom that the costs of default are minimal, and includes articles on the bad effect elections have on intelligent decision making about public investment, the increasingly common practice of offering citizenship “for sale,” and China’s investment in Africa. And we profile economist Richard Layard, who says economics has strayed too far from its original purpose of promoting happiness and maximizing well-being.

Tackling Inequality in sub-Saharan Africa Could Yield Mileage on Growth


Antoinette Sayehby Antoinette Sayeh

(Versions in Français and Português)

Rising inequality is both a moral and economic issue that has implications for the general health of the global economy, and impacts prosperity and growth.

So it’s not surprising that reducing inequality is an integral part of the Sustainable Development Goals  adopted by world leaders at the United Nations summit in September. I often discuss with my colleagues where sub-Saharan Africa stands with respect to these objectives. Unfortunately, the region remains one of the most unequal in the world, on par with Latin America (see Chart 1). In fact, inequality seems markedly higher at all levels of income in the region than elsewhere (see Chart 2).

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Emerging Market Corporate Debt in Foreign Currencies


By Selim Elekdag and Gaston Gelos

Debt held by firms in emerging market economies in a currency other than their own poses extra complications these days. When the U.S. Fed does eventually raise interest rates, the accompanying further strengthening of the U.S. dollar will mean an emerging market’s own currency will depreciate against the higher value of the U.S. dollar, and would make it increasingly difficult for firms to service their foreign currency-denominated debts if they have not been properly hedged.

In the latest Global Financial Stability Report, we find that firms in emerging markets that have increased their debt-to-assets ratios have generally also increased their overall sensitivity to changes in the exchange rate—commonly called exchange-rate exposure.

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The African Century


By Antoinette M. Sayeh and Abebe Aemro Selassie

If, as has been observed, demography is destiny, this will be the African century.

Most countries in sub-Saharan Africa are on the cusp of a demographic transition—the years when the share of young and old in the population declines and those in working age range (15-64 years) increases.

Elsewhere, this transition has generally been accompanied by higher savings, incomes, and economic growth. Our latest Regional Economic Outlook for sub-Saharan Africa looks at how the transition might play out and the implications for economic policies.
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