38583 THIRD QUARTER 2006 ·World Bank Contacts .....................................................................................................................................................................................2 · Jordan's Education Reform Progress ........................................................................................................................... 3 · Recent Economic Developments ............................................................................................................................................. 10 · Bank Group Operations .................................................................................................................................................................................... 15 ·The International Finance Corporation's Activities in Jordan ...................................... 18 · News, Recent and Upcoming Activities .............................................................................................................................. 21 ·Recent World Bank Publications ............................................................................................................................................................ 23 Joseph Saba, Country Director World Bank InternetAddress: Tel. (202) 473 2992 www.worldbank.org Fax (202) 477 1482 Email: Jsaba@worldbank.org To view and order World Bank Publications: http://publications.worldbank.org/ecommerce/ Osman Ahmed, Lead Country Officer Tel. (202) 473 7063 For more information on World Bank Fax (202) 477 1482 programs in Jordan: Email: Oahmed@worldbank.org www.worldbank.org/mena Sebnem Akkaya, Senior Country Economist To locate research papers, best practices, Beirut Country Office terms of reference, presentations, key policies, Tel. (961 1) 987 800 communities of practice, project information Fax (961 1) 986 800 and useful links from the World Bank and Email: Sakkaya@worldbank.org other sites: Email: askMNA@worldbank.org Sophie Warlop, OperationsAnalyst Tel. (202) 473 7255 Jordan Public Information Center Fax (202) 477 1482 Department of Public Libraries Email: Swarlop@worldbank.org GreaterAmman Municipality Downtown, Next to the RomanAmphitheater Loraine James, ProgramAssistan Tel: 962-6-4627718/9 Tel: (202) 473 5621 Fax: (202) 477 1482 Email: Ljames@worldbank.org World BankAddress: 1818 H Street, NW Washington, DC 20433 Editorial Team SebnemAkkaya Ghassan N.Alkhoja AhmedAttiga Chadi Bou Habib Haneen Ismail Sayed Sophie Warlop With special thanks to Mary Saba 2 Third Quarter 2006 JORDAN'S EDUCATION REFORM PROGRESS Introduction Within this policy framework, the Government of Jordan (GOJ) prepared a comprehensive and inte- «The Hashemite Kingdom of Jordan has the grated program for the major reform of the educa- quality competitive human resource system to tion system. provide all people with long-life learning ex- periences relevant to their current and future Sector Issues needs in order to respond to and stimulate sus- tained economic development through an edu- Jordan faced significant challenges as it continued cated population and a skilled workforce». With its program of economic and social development in these words from His Majesty King Abdullah II, the evolving information age. As a resource-poor delivered at the «Vision Forum for the Future of country, Jordan recognized that the development Education» held in September 2002, Jordan em- of a high quality labor force is a priority for build- barked on an ambitious and comprehensive pro- ing a competitive advantage in the global knowl- gram for education reform called Education Re- edge economy. The GOJ also recognized that there form for Knowledge Economy (ERfKE). Under is a mismatch between the skills of the graduates the continued leadership of His Excellency Dr. and labor market needs. The new global economy Khaled Toukan, Minister of Education, this pro- requires that Jordan develop an education system gram has now entered its fourth year of imple- that promotes higher-level thinking, problem-solv- mentation and the ERfKE project is currently re- ing skills and team work while the current system garded as a model for education reform through- relies on traditional, rote-learning pedagogy (see out the Arab region. Box 1 for the Changing Role of the Student). More- over, the Ministry of Education (MOE) is cognizant Background of the importance of Early Childhood Education (ECE) in improving school achievement (especially Education has long been a priority investment of children from underprivileged backgrounds) and for Jordan. With the call by His Majesty King fostering lifelong learning. In light of these goals, Abdullah II that the economic future of Jordan the GOJ, with Bank assistance, has identified the will be found through successful participation in following main issues for the education sector in the global knowledge economy, and more partic- Jordan: ularly in the value-added information technology industries, the new vision for the requirements of Gaps in government capacity to the educational system began to emerge. From transform the education system: this new vision for human resource development, four education sector policy vectors have been · There is limited capacity to analyze and make identified: use of data for decision-making purposes. · Structuring the educational system to ensure lifelong learning; · The practice of providing a facility for a mini- mum of 10 students has resulted not only in inef- · Ensuring responsiveness of the educational sys- ficient and unaffordable school sizes throughout tem to the economy; the country, but also in a mismatch between stu- dent population and school seats. · Accessing and utilizing information and com- munications technologies (ICT) to support ef- · The institutional arrangements in general, and in fective learning and system management; and the MOE in particular, have accommodated and supported a traditional, hierarchical top-down · Ensuring quality learning experiences and envi- model of management as opposed to a participa- ronments. tory, outcome-based and student-centered model. Third Quarter 2006 3 Box 1. The Changing Role of the Student Traditional Role New Positive Role From a recipient of information, a limited To a creative and active participant, who participant, expected to memorize debates and discusses, presents ideas freely information from textbooks and retain it until and boldly, criticizes openly and suggest exam time requires an effort to recall and options, understands and uses technology, regurgitate the information. knows the value of foreign languages, makes difficult decisions, and stays committed to the path of ever increasing knowledge and growth through understanding. Source: «Towards a Vision for a New Education System» Forum,Amman, Jordan, 2002. · The transformation from a traditional model to a · Teacher upgrading and preparation have not more learner-centered model requires a systemic been effective. change in the education sector from the regula- tory framework down to school level practices. Some children are studying in unsafe and overcrowded schools: · There is limited coordination at the system level between the various providers of educational · Some public schools are unsafe, overcrowded opportunity. and lack appropriate and adequate learning re- · Capacity to conduct monitoring and evaluation sources, which may be impacting the quality of of progress in education reform is weak. learning. Mismatch between the skills taught · A large proportion of the schools in Jordan are at schools and those needed in the small in size (average 300-400 students), yet op- knowledge economy: erating under capacity in rural areas and over- crowded in urban areas. · A knowledge economy requires key basic skills · School building designs have not taken cost-ef- and core competencies as well as essential con- ficiency measures into account. tent. The Organisation for Economic Co-opera- tion and Development (OECD) has identified · Someschoolfacilities,especiallyrentedschools, the following essential skills: critical thinking, are inappropriate for delivering the curricular re- problem solving, decision making, using num- quirement for knowledge economy. bers, communication skills, managing informa- · Over 300 schools have been identified as requir- tion, being responsive, learning continuously ing urgent rehabilitation. (lifelong learning), entrepreneurship, adaptabil- ity, teamwork, innovation and creativity. The Unequal early childhood education Jordanian curriculum focused primarily on sub- opportunities: ject matter content, not all of it relevant or es- sential for a knowledge economy. · Lower income households have unequal oppor- · The vocational secondary education track has tunity to ECE, both due to limited supply in the narrow occupational specializations that do areas where the poor live and the relatively high not adequately match current labor market de- cost of ECE, which is provided mainly by the mands. private sector. 4 Third Quarter 2006 Box 2. The Shift in Teaching and Learning Strategies Before After · Teacher Centered · Learner Center · Verbal Teaching · Meaningful Learning and Application · Verbal Aptitude · Acquisition of Experience, Abilities and · Traditional Teaching Methods Competencies · Teaching Based on Textbooks · Learning Skills to Meet Future Needs · Teaching Based on Local Concepts · e-Learning · Single-Minded Traditional Curricula and · Global Learning and Openness to Textbooks International Cultures · Teacher's Role: Dominator, Spoon- · Teacher as Facilitator, Guide Feeder, the Only Source of Information · Comprehensive Evaluation · Assessment of Academic Achievement · Creative use of Technology · Technology Consumption · Learning through Responsibility and · Teaching Responsibility is Restricted to Partnerships MOE Schools · School is the foundation of Society · Working in Isolation Source: «Towards a Vision for a New Education System»,Amman, Jordan, 2002. The New Vision ­ ERfKE Program Component 1. Re-orient Education Policy Objec- tives and Strategies through Governance and Ad- The new vision for education reform establishes a ministrative Reform. Component 1 is designed to multi-phase program, starting with the current five provide a redefinition of the vision and associated year ERfKE I project, which became effective in policy objectives of the educational system that May 2003. ERfKE I is a US$380million project, will enable the required transformation to meet the for which the World Bank is providing US$120 emerging needs of the knowledge economy. This million of the total, in addition to being the lead component has five sub-components: (i) a redefined agency in the design and conceptualization of the vision and comprehensive integrated national edu- reform. Nine other donors are providing financ- cation strategy; (ii) revised governance, manage- ing (see Table 1 for list of Donors). Many other ment, and decision-making mechanisms to achieve partners have since joined the project, all working and support an education system that delivers basic under coordination and orchestration by the De- skills, core competencies and essential learning for velopment Coordination Unit (DCU) of the MOE. the knowledge economy; (iii) an Education Deci- The ERfKE I project includes the following four sion Support System (EDSS) to facilitate efficient components: policy analysis and effective system management, Table 1. List of ERfKE I Donors Donor Support for Canadian International Development Agency (CIDA) Components 1 and 2 US Agency for International Development (USAID) Components 2 and 4 European Investment Bank Component 3 Islamic Development Bank Component 3 Arab Fund for Social and Economic Development Component 3 Japan International Cooperation Agency (JICA) Component 2 UK Department for International Development (DfID) Component 1 Germany's Kreditanstalt für Wiederaufbau (KfW) Component 3 European Commission Education Budget Support Third Quarter 2006 5 as well as to promote transparency; (iv) compre- signed to ensure adequate provision of structurally hensive and coordinated educational research, safeschoolbuildingsandanimprovedlearningenvi- policy analysis and monitoring and evaluation ac- ronment. This component has two sub-components: tivities; and (v) effective management and efficient (i)replacementofstructurallyunsafeandovercrowd- coordination of educational investments directed ed schools; and (ii) upgrading existing schools to towards reform efforts. Box 3 illustrates the general support learning in the knowledge economy through expected outcomes for the MOE as a Ministry from the provision of computer and science labs. this component. Component 4: Promote Readiness for Learning Component 2. Transform Education Programs through ECE. Component 4 is designed to en- and Practices for the Knowledge Economy. Com- hance equity through public provision to kindergar- ponent 2 is designed to transform teaching and ten (KG) II to low-income areas. MOE will initially learning processes in order to achieve learning develop a program to phase in KG II for children at outcomes that are consistent with the requirements age 5, to be followed by KG I at the end of ERfKE of the knowledge economy. This component has I. This component has four sub-components: (i) an three sub-components: (i) development of new enhanced institutional capacity for ECE; (ii) a cadre curriculum and enhanced learning assessment; (ii) of early childhood educators; (iii) increased access professional development of MOE personnel; and to KGs for the poor, and (iv) parent and community (iii) provide required resources to support effective participation and partnership. learning. This component is considered the core of the reform program, where the shift in teaching/ learning practices will be initiated (see Box 2). Progress to Date Component 3. Support Provision of Quality Physi- In January 2006, the World Bank conducted a two- cal Learning Environments. Component 3 is de- week visit to Jordan, with team of 10 experts, to Box 3. The New MOE: A Shift in Focus MOE Senior Management Supervisors MOE Senior Principal Management Student/ District Directorate Learner School Principal Facilitator Onsite Educational Leader The Teacher Monitoring and Support The Student Vision and Direction for the System Hierarchical Model Based on Importance Based on Authority Learner at Centre of Attention Source: «Towards a Vision for a New Education System» Forum,Amman, Jordan, 2002. 6 Third Quarter 2006 undertake a Mid-Term Review of the ERfKE I · Over 15,000 teachers have completed training Project. The World Bank team assessed ERfKE as on use of the Eduwave module. progressing very well, particularly given its com- prehensive scope and its complexity. The firm as- · Over 13,000 teachers have been trained on cur- sessment of the World Bank team is that the fun- ricula and learning assessment. damentals of a reform of the education system are · New Early Childhood Education curriculum de- either in place today, or are under development. signed and adopted. Specifically, the major accomplishments achieved during the first three years include: · 300 trainers have been certified at international level in Early Childhood Education and another · An education sector strategy has been developed 300 teachers trained in the new curriculum. and adopted. · Computer labs have been established and · The Ministry of Education Executive Manage- equipped in 1,042 schools. ment team has been restructured and reoriented. · Connectivity with the Queen Rania Information · Pilot projects focusing on decentralization of Technology Center which serves as an e-learn- decision making, reform of accounting systems, ing hub has been established with over 2,100 and school level performance audit have been schools. completed. · 88 out of a planned 160 new schools are under · A monitoring and evaluation framework has construction and ahead of schedule. been designed, with baseline studies initiated. · The design of 140 KG's is in hand with nine be- · New general and specific learning outcomes ing completed and tendered for construction. have been established for all subjects and levels. · 350 schools to be rehabilitated have been de- signed and works have been tendered. · Curriculum and core competencies have been revised for all subjects in grades 1, 4, 8, 10, and · 650 additional computer labs and 350 science MIS for grades 11 and 12. labs have been designed and works have been tendered. · E-learning content has been developed for e- Math, e-English, e-Arabic, e-Science, and e- While the impact of the project on learning out- ICT. E-Math is currently being piloted in 100 comes has yet to be fully determined, it is relevant «Discovery» Schools. to note that as a result of previous Bank investments in the sector, standardized math and science scores · 33,500 teachers have completed computer train- continue to improve and that in the TIMSS inter- ing with 21,000 receiving International Com- national tests, Jordan currently stands 1st amongst puter Driving License certification. the Arab countries in Science (performing above the overall international average, as shown in Fig- · 500 teachers have completed training on World- ure 1), and 2nd in Math amongst the Arab countries Links. (Figure 2). Third Quarter 2006 7 Challenges formation of education; While progress has been impressive, challenges · the capacity to implement and sustain the mo- remain. During the combined ERfKE Donor/Part- mentum of implementation; ner Meeting held in January 2006, the MOE iden- · commitment to a culture of cooperative effort tified the following set of challenges, which it, and devolved responsibility; along with the support of all donors and partners, is addressing: · leadership development and training for people, and for work management, and continuous sys- · Understanding of and commitment to the trans- tem improvement; Figure 1. TIMSS 2003 - Grade 8 Science Select Countries Figure 2. TIMSS 2003 - Grade 8 Math Select Countries Source: Trends in International Mathematics and Science Study. 8 Third Quarter 2006 · building capacity for future sustained national tion system is a long term strategic process, and has leadership and reform; made education reform a national priority. The GOJ has already indicated its desire to start the planning · dissipation of effort and expertise on too many process for the second phase of reform: ERfKE II. initiatives at one time; The Government's policy for the next 5-ten years · clarity of focus of technical assistance initiativesenvisions the continuation and deepening of the re- and timely interventions and support; forms begun under the ERfKE I program, in addi- tion to new reforms: (i) expand access to pre-prima- · monitoring and evaluation of the pace, extent and ry and post-basic education, as well as to reach the quality of change; and poor who are being left out of basic education; (ii) improve the quality of education; and (iii) enhance · understanding of the implications of significant management and governance of the sector and the investment in ICT for teaching and learning. Ministry of Education. Future Phases The World Bank has indicated its firm support to this The ERfKE I Project is well on its away to achiev- reform program in Jordan, and stands ready to mo- ing its development objectives. Nevertheless, the bilize the required resources to achieve Jordan's vi- GOJ has indicated its commitment to continue the sion for building human resources for a value-added, reform effort. It recognizes that reform of the educa-skill-intensive and the knowledge-based economy. Third Quarter 2006 9 RECENT ECONOMIC DEVELOPMENTS Overview demands generated by continued large capital in- flows, these typically non-tradable sectors grew by While remaining high, economic growth has 18.5 and 17.4 percent, respectively, against 9 and slightly regressed compared to the performanc- 11 percent a year earlier. All other sectors grew at a es observed in the past two years. Real GDP slower pace, especially finance and insurance ser- growth reached 6.7 percent, down from 7.8 percent vices, reflecting the slowdown in the Amman Stock a year earlier. This development is partially linked Exchange (ASE). to the Government's willingness to control public deficit, which brought down the real growth in the Table 1. Real GDP Growth and the public services sector. It is also linked to security Manufacturing Sector developments and concerns, limitations on trans- port activity with Iraq and security issue in the neighboring country hampering the development of the transport and storage sector. Nonetheless, the correction in the stock exchange market had a downward impact on the activity growth of the fi- nancial and banking sector. Meanwhile, regional economic developments continue to have contrasted effects on the country. The increase in oil prices is deepening the Trade Deficit, while large transfers to the country allow for higher imports and continue to boost demand and prices in the real estate sector as shown by the 63 percent increase in land registration fees over a year. Trade Deficit increased by 34 percent in the First Quarter of 2006 over the First Quarter Source: Ministry of Planning andWorld Bank staff calculations. of 2005. Inflationary pressures are becoming more tangible, especially with the removal of oil subsi- The manufacturing sector also remained dy- dies, as the Consumer Price Index (CPI) inflation namic. External and internal demand for manufac- gradually increases, reaching 4.4 percent in the turing goods generated a 12 percent growth in the First Quarter of 2006 compared to 3.1 percent in value added of the manufacturing sector and man- the First Quarter of 2005. The removal of oil sub- ufacturing exports continue to be dynamic (see the sidies has, however, allowed an effective contain- following section). The Industrial Production In- ment of the Public Deficit. Public balances also dex (IPI) exhibits a 12.1 percent increase between benefited from the positive impact of a 40 percent the First Quarter of 2005 and the First Quarter of increase in revenues. 2006. In particular, the IPI for the manufacturing sector increased by 14 percent in 2006 against 8.3 Real Sector Developments percent in the First Quarter of 2005. The contribu- tion of the sector to the total GDP growth reached 31 percent in the First Quarter of 2006 against 28 Real GDP growth in the First Quarter of 2006 percent a year earlier. remained strong at 6.7 percent. This growth rate is 1 percentage point lower than in the First Quar- Despite strong growth performance, high unem- ter of 2005 (7.7 percent). The highest performance ployment persists. Unemployment reached 14.4 occurred in the construction sector and in the com- percent in the First Quarter of 2006 from 13.4 per- munity, social and personal services. Directly af- cent in the First Quarter of 2005. The high unem- fected by the higher consumption and investment ployment rates coalesce with a considerable emi- 10 Third Quarter 2006 gration rate of high skilled Jordanian workers to the Table 2. Current and Capital Account Balances Gulf countries and an immigration of low skilled (US$ million) foreign labor.1 High rates of unemployment chroni- cally contribute to the poverty problem, with fami- lies of the unemployed being significantly more likely to be poor (22 percent vs. 13 percent for the employed).2 External Sector Developments Jordan's Current Account Deficit more than doubled in the First Quarter of 2006 compared to the First Quarter of 2005. This increase stems fromalargeincrease(41percent)intheTradeDef- icit of goods and services to US$1.5 billion from US$1.1 billion. The increase in the Trade Deficit is due to a 19.8 percent rise in imports, partially compensated by a 4.6 percent increase in exports. Net Workers Remittances and Net Compensations Source: Central Bank of Jordan, Ministry of Planning and of employees3 grew by 7.5 percent, but fell short World Bank staff calculations. of financing the growing Trade Deficit--covering only 37 percent of the Trade Deficit. The major The increase in exports of goods has somewhat financing for the Current Account Deficit came slowed down, but Jordan continues to diversify from capital inflows, with Foreign Direct Invest- its export offer significantly. Exports of goods ment (FDI) and other capital inflows continuing to rose by 12 percent in the First Quarter of 2006 record unprecedented levels. The Capital Account against 16 percent in the First Quarter of 2005. surplus soared to US$1.06 billion from US$411 The clothing industries located in the QIZs re- million a year earlier. FDI rose to US$1.35 bil- main major exporters of manufactured goods, lion against US$484 million in the First Quarter though they are no longer the leading export sec- of 2005. tor. Clothes exports increased by 16.7 percent in the First Quarter of 2006 against 19.1 percent a Jordan managed to maintain high foreign cur- year earlier. Their share in total exports, however, rency reserves. The reserves at the Central Bank slightly increased to 26 percent of total exports reached US$5.4 billion in March 2006, slightly from 25 percent in the First Quarter of 2005. Ex- above the US$5.32 billion reached in March ports of chemicals and manufactured goods other 2006. However, expressed in months of imports than clothes, which have higher value added, rose of Goods and Non Factor Services (GNFS), re- by 20 percent and now account for 31 percent of serves declined to 5.2 months of GNFS imports total exports, against 26 percent a year earlier. against 6.2 months in the First Quarter of 2005. Exports of food and beverages also performed Similarly, the coverage of the broad money supply well, increasing by 16 percent compared to 5 per- by the foreign reserves decreased to 31.2 percent cent in the First Quarter of 2005, bringing their in the First Quarter of 2006 from 34.8 percent in share in exports to 11 percent, up from 10 percent the First Quarter of 2005. last year. 1 The World Bank is currently preparing a study on the labor market in Jordan which is expected to be finalized in Fall 2006. 2 World Bank (2004), Jordan PovertyAssessment. 3 The Net Workers Remittances are part of the net cur- rent transfers, while the Net Compensations of employ- ees are part of the Net Income receipts. Third Quarter 2006 11 Similarly, the rise in exports to the European Union in volume at constant 2005 exchange rate between (EU) by 51 percent underlines the increasing geo- the Euro and the JD and of an 8.4 percent decrease graphic diversification. This occurred despite the in value at 2006 exchange rate. JD appreciation against the Euro in the First Quar- ter of 2006 and over and above 48 percent increase Fiscal Developments in exports to the EU in 2005. With the continuous increase in oil-based wealth, exports to the Arab countries (excluding Iraq) have maintained a pace Results for the First Quarter of 2006 point to a of increase similar to that observed a year ago, ris- continued strong revenue collection perfomance ing by 18.8 percent. Exports to Iraq suffered from with the increase in domestic revenues reaching the deteriorating security situation and slightly re- 40 percent compared to 29 percent over the same gressed by 1 percent. Exports to the United States period last year. Income tax revenue accounted for increasedby24.3percentagainst32.0percentayear 38 percent of the total increase, while the inrease in earlier, underlining the slowdown in clothes exports sales tax accounted for 24 percent of the rise in rev- which increased by only 6 percent compared to 32 enues. Land registration fees increased by 63 per- percent in the First Quarter of 2005. Nevertheless, cent, hence reflecting both strong price and activity the share of clothes in exports to the US remains dynamics of the real estate sector. high at 89.7 percent. Public expenditures benefited from the gradual Table 3. Domestic Exports by Destination in the reduction of oil subsidies in the First Quarter of First Quarter of 2006 2006. Expenditures increased by 21 percent in the First Quarter of 2006 against 9 percent in the First Quarter of 2005. The main increase occurred in the capital expenditures which represented 62 percent of the total rise in expenditures. Defense and security expenditures and interest payments represented re- spectively 12 percent and 10 percent of the increase in expenditures. Oil subsidies had a downward im- pact on expenditures so far in 2006. Oil subsidies decreased by 10 percent and contributed by a nega- tive 1.1 percentage point to the change in expendi- tures between the First Quarter of 2005 and the First Quarter of 2006. Following additional cuts in April, the decrease in oil subsidies would further contrib- ute to the containment of public expenditures. Sub- sidies for the month of April 2006 declined by 60 percent compared to April 2005. However, the con- tinuing increase in oil prices is setting oil subsidies Source: Central Bank of Jordan andWorld Bank staff calculations.at higher-than- budgeted levels. Imports of goods increased by 23 percent com- Despite the overall increase in expenditures, the pared to a 27 percent increase in the First Quarter dynamic of revenues allowed for higher positive of2005.Thepricedynamicaccountsfor4percentage fiscal balances in the First Quarter of 2006 com- points of the increase in imports and the remaining pared to the First Quarter of 2005. The budget bal- 19 percentage points are due to a volume increase. ance before grants rose to JD147 million, and after The price dynamic is explained by the combination grants reached JD198 million, despite the halving of a 51 percent increase in the oil imports price in- of grants from JD107 million in the First Quarter of dex as opposed to a 7 percent decrease in the price 2005 to JD56 million in the First Quarter of 2006. index of all other import items. This decrease in the The primary balances depicted the same pattern, index of imports other than oil products is partially with the balance before grants progressing to JD194 linked to the appreciation of the JD against the Eu- million and the balance after grants reaching JD249 ro. The analysis of the pattern of imports by origin million. Last year's figures for the same period shows that imports from the EU increased by 17.4 showed a primary surplus before grants of JD54 mil- percent as a combination of a 28.4 percent increase lion and a balance after grants of JD162 million. 12 Third Quarter 2006 Table 1. Central Government Budget period of 2005. At the same time, the oil imports price index increased by 51 percent on average in 2004 2005 2006 the First Quarter of 2006 and by 32 percent in the Domestic Revenues 503 650 908 First Quarter of 2005. Another measure of price Tax Revenues 357 474 641 dynamics is the GDP deflator, which rose by 4.2 percent in the First Quarter of 2006 mainly re- Income and Profits 108 160 257 flecting the impact of higher demand for Jordan's Sales Tax 170 215 240 goods and services, due to the expenditure effect Customs 58 69 74 of both Iraqi immigrants and oil money flowing into the country. Other 21 30 40 Non-Tax Revenues 114 169 256 The broad money supply (M2) slightly de- Repayment 33 7 11 creased by 1 percent between December 2005 Total Expenditures 578 629 777 and March 2006, compared to a 2.4 percent in- crease a year earlier. Time deposits in Jordanian Current Expenditures 507 593 659 Dinar (JD) remained unchanged, while time depos- Excluding Debt Service 475 560 612 its in foreign currencies decreased by 2 percent. o/w Defense & Security 137 159 174 Demand deposits in JD decreased by 5 percent and demand deposits in foreign currencies rose by 2.7 o/w Oil Subsidies 65 95 86 percent. The decrease in deposits partly reflects Debt Service 32 33 47 portfolio re-allocation to the stock-exchange, rath- External 21 20 20 er than an outflow of capital from the system. An examination of the counterparts of money supply Internal 11 13 27 provides further evidence to this. Net Foreign As- Capital Expenditures 71 37 118 sets have increased by 4.5 percent, which proves Surplus / Deficit -75 21 131 that the decline in money supply is not linked to Primary Balance -43 54 178 any decline in the foreign counterpart. The net do- mestic assets also increased by 7.6 percent. But Balance Including Grants the line other items registered a sharp decline by Surplus / Deficit 68 128 186 30 percent which reflected into a decrease in the Primary Balance 100 162 234 money supply. Grants 143 107 56 Lending to the private sector continued to in- Source: JordanianAuthorities and World Bank staff estimates. crease, in line with the strong GDP growth and the rise in banks' resources. Claims on private The total debt stock of the public sector increased sector (resident) increased by 13 percent over the by JD66 million since end 2005. The share of the First Quarter of 2006 (compared to a 6.4 percent foreign debt in the total debt decreased to 66.8 per- increase in 2004) which corresponds to an increase cent from 67.2 percent at end-2005, and domestic by JD994 million. The share of these claims in the debt progressed by 2.2 percent. commercial banks' assets rose to 39.5 percent from 36 percent in December 2005 and 33 percent in Prices, Money and Banking March 2005. Consumers and stock market inves- tors remained the most dynamic borrowers with a 25 percent increase in the lending to these two cat- The Consumer Price Index (CPI) inflation ac- egories over the First Quarter of 2006. Commercial celerated in the First Quarter of 2006 following banks' claims on the public sector increased by 3 the reductions in oil subsidies. The CPI increased percent while their deposits with the Central Bank by 4.4 percent on average in the First Quarter of declined by about 1 percent. 2006 compared to a 3.1 percent increase in the First Quarter of 2005. The CPI in the items Fuel and Electricity, with a 4.3 percent share in the in- dex, rose by 19.4 percent in the First Quarter of 2006 against a 3.5 percent increase in the same Third Quarter 2006 13 Table 2. Real Interest Rate and GDP Inflation Dec-04 Dec-05 04/03 (bpt) Mar-06 06/05 (bpt) Central Bank Re-Discount Rate 0.63% 2.28% 165 2.44% 16 Certificates of Deposit - three months -0.24% 1.99% 223 1.97% -2 Certificates of Deposit - six months 0.10% 2.71% 261 2.49% -22 Treasury Bills - six months -1.02% 2.00% 302 2.25% 25 Treasury Bonds 1.43% 2.81% 137 4.42% 162 Average Interest Rates on Deposits Demand -2.66% -3.51% -85 -3.53% -2 Saving -2.29% -3.17% -88 -2.91% 26 Time 0.58% -0.58% 0 0.05% 63 Average Interest Rates on Lending Overdrafts 5.54% 4.93% -61 4.00% -93 Loans and Advances 4.35% 3.82% -54 3.76% -5 Discounted Bills and Bonds 5.68% 3.64% -204 3.71% 7 Prime Rate Served to Best Clients 2.81% 2.76% -5 2.44% -32 GDP Deflator (period average) 3.10% 4.13% 4.21% Source: Central Bank of Jordan, Ministry of Planning and World Bank staff calculations. The monetary developments became more com- prime rate suggests that banks continue to actively plex.TheCentralBankraisedthediscountrateby25 compete for the best clients in an environment where basis points (bpt) since year-end 2005. The nominal the decline in resources is perceived as temporary.4 interest rate on the 3 months Certificate of Depos- its (CDs) increased by only 6 bpt, while the rate on The Amman Stock Exchange (ASE) continued 6 months CDs declined by 15 bpt. The re-financing to decline in the First Quarter of 2006. The cor- cost for the banks rose by 16 bpt in real terms, while rection occurred at a less dramatic rhythm than in the real interest rate on 3 months CDs declined by 2 the rest of the region. However, the ASE index de- bpt and on 6 months CDs by 22 bpt. This loosening creased by 13.7 percent between December 2005 of the constraint on banks' liquidity occurred in line and March 2006. The decrease was mainly in the with the slowdown in the rise of money supply. Al- banking, insurance and services sectors, while the so, banks raised their depositors' rates in order to at- index of the Industrial Sector decreased by a moder- tract resources, while slightly increasing their lend- ate 2.8 percent. ing rates. The latter occurred against a sharp decline in interest rates on overdraft. More important is the Table 3. Amman Stock Exchange Change decline by 75 bpt between February and March 2006 in Indexes in the nominal prime lending interest rate served to best clients. Such a de- Sector/Indexes Dec-04 Dec-05 05/04 Mar-06 06/05 velopment might seem puzzling be- Banking Sector 12.643% 6.892% 1.33.6% 14.339% -15.1% cause the decline in banks' resources, Insurance Sector 7.526% 7.382% 98.1% 6.482% -12.2% the increase in depositors' rates, and the rising inflation should have at least Service Sector 4.284% 3.333% 77.8% 2.711% -18.7% stabilized the prime rate if not pushed Industrial Sector 19.486% 2.903% 14.9% 2.822% -2.8% it upwards. Hence, the decline in the Total Index 8.814% 8.192% 92.9% 7.070% -13.7% Source:ASE and World Bank Staff Calculations. 4 Indeed, data forApril show a 4 percent increase in the money supply over the month and a 3 percent increase compared to end 2005. 14 Third Quarter 2006 BANK GROUP OPERATIONS To support Jordan's recently developed National IBRD Ongoing Projects Agenda, the Bank's lending program over the next four years will revolve around the following four The current portfolio in Jordan consists of six proj- cross-sectoral clusters: ects for a total commitment amount of US$268 mil- lion, of which US$128 million has been disbursed · strengthening the investment environment for a to-date. skill-intensive and knowledge-based economy; · supporting local development through increased Amman Water and Sanitation Management access to services and economic opportunities; Project (AWSMP). (US$55 million.) The Project aims at: (i) improving the efficiency, management, · reforming social protection and expanding inclu- operation and delivery of water and wastewater ser- sion; and vices for the Amman Service Area; and (ii) laying the groundwork for the sustainable involvement · restructuring public expenditures and supporting of the private sector in the overall management of public sector reform. these services. IBRD Projects In The Pipeline Higher Education Development Project (HEDP). (US$34.7 million.) The objective of the Regional and Local Development Project Project is to initiate improvements in the quality, (US$35 million). The objectives of the Project are relevance and efficiency of Jordan's higher educa- to: (i) strengthen the intergovernmental finance sys- tion, and to support Jordan's program to reform tem; (ii) upgrade financial management, technical sector governance. and administrative capacities at the local level; and (iii) increase the coverage and quality of municipal service provision, with particular emphasis on un- HorticulturalExportsPromotionLearningand Innovation Loan (US$5 million). The Loan will ini- der-served areas. tiate the process of establishing Jordan as a reliable supplier of non-traditional, high-value export crops Cultural Heritage, Tourism and Urban Devel- to niche markets in the European Union and Gulf opment (US$35 million). The objective of the Proj- countries. ect is to develop regionally balanced cultural tour- ism through regeneration of historic urban neighbor- hoods and creation of cohesive and culturally rich Education Reform for the Knowledge Economy (US$120 million). The Project supports systemic urban attraction poles. educational reform in Jordan that extends from Early Childhood Education through Secondary Education. Social Protection Enhancement Project The Project will contribute to the development of hu- (US$10 million). The project will assist the Gov- man capital with the skills and competencies required ernment of Jordan in its efforts to alleviate poverty by the Knowledge Economy. amongst the poorest of the population while provid- ing them with opportunities to become self-reliant. These will be achieved by enhancing the social pro- Amman Development Corridor (US$38 mil- lion). The Project aims at: (i) assisting Jordan's tection programs through: (i) improving targeting growth strategy by providing needed infrastruc- and administration of the cash assistance programs; ture to support Amman's role as a regional center (ii) strengthening and improving the quality of socialfor trade and services; and (ii) helping ensure that welfare services; and (iii) strengthening and further Jordan's road assets are managed in a cost-effective developing programs aimed at developing earning and sustainable manner. skills and capacities of the poor and vulnerable. Third Quarter 2006 15 Loan Undisbursed Active Portfolio Approval Closing Date Amount Amount Primary Sector US$ M US$ M Date Amman Water and Sanitation Management Mar-99 55.0 2.2 Water Supply/Sanitation Jan-07 Higher Education Development Feb-00 34.7 9.0 Education Jun-07 Horticultural Exports Promotion Agriculture Markets and Learning and Innovation Jun-02 5.0 2.8 Trade Dec-06 Education Reform for Knowledge Economy May-03 120.0 75.7 Education Dec-08 Amman Development Corridor Jun-04 38.0 35.9 Transport Jun-09 Public Sector Capacity Building Mar-05 15.0 14.4 Public Sector Mar-09 Total 267.7 140.0 Public Sector Capacity Building Project and (ii) support a feasibility study for the future de- (US$15 million). The objective of the Project is to velopment of a commercial size wind energy project support the ongoing implementation of the Gov- with private sector involvement. ernment's public sector reform strategy by ensur- ing that the required institutional infrastructure is in Conservation of Medicinal/Herbal Plants place and functioning. It also seeks to support an im- Project (US$5 million). The Project supports the portant set of cross-cutting reforms in areas ranging conservation, management and sustainable utili- from policy coordination to improved financial and zation of medicinal and herbal plants in Jordan human resource practices. through ensuring effective in-situ protection of threatened habitats and ecosystems and ex-situ Ongoing Grants sustainable use. The main components are: (i) in- stitutional strengthening; (ii) pilot sites conserva- tion; (iii) public awareness and education; and (iv) Jordan's active grant portfolio includes 10 grants for income generation activities. a total of US$23.3 million, of which US$7.8 million has been disbursed to-date. Ozone Depleting Substances (ODS) Phaseout II (US$5 million). The overall objective is to assist Institutional Development Fund Grant to Sup- Jordan in phasing out the use of ODS within its port the Development of a Monitoring and Evalu- territory through, inter alia: (i) the introduction of ation System (US$395,000). The Grant is expected appropriate policy measures; (ii) the institutional to contribute to the design and implementation of strengthening of responsible governmental entities; a sound monitoring and evaluation framework for and (iii) the implementation of specific cost-effec- the Government to: (i) adequately monitor input re- tive priority investments to reduce consumption of quirements of large scale reform projects; and (ii) Ozone Depleting Substances in the manufacturing follow implementation of large-scale, multi-sectoral and servicing sectors. reform projects through various activities. Promotion of a Wind Power Market Sustainable Development of Renewable Ener- (US$350,000 Global Environment Facility). The gy Resources and Promotion of Energy Efficiency objective of the Project is to remove barriers to wind Grant (US$1 million). The objectives of the Grant farm development, including lack of a legal and reg- are to: (i) contribute to the Government's efforts to ulatory framework, lack of institutional capacity and integrate climate change concerns in its economic inadequate information on wind resources, with the development strategy by removing the barriers to reforms clearing the way for a private entity to build promoting the development of Jordan's renewable a 60MW wind farm. energy resources (wind, solar and geothermal), and in enhancing the efficiency of energy use in line with Privatization Technical Assistance (US$9.5 the policy to meet the energy needs of Jordan in an million). The objectives of the Grant are to strength- economic and environmentally sustainable manner; en the investment climate and job creation, leading 16 Third Quarter 2006 to new investments and improve effectiveness and Component 2 (Municipal Management) (described efficiency of the delivery of public services, and cre- under the projects in the pipeline section). ation of fiscal space. Project Preparation Technical Assistance Project Preparation Technical Assistance Grant (PHRD) for the Employer-Driven Skills Grant (PHRD) for the Regional and Municipal Development Project (US$350,000). The Grant Development Project (US$517,000). The Grant sup- supports the Project preparation by improving the ports the acquisition of technical assistance by the institutional capacity of the future implementing Project implementing agency to prepare or imple- agencies, carrying out employers' consultations ment the project (described in previous section). and carrying out surveys. Project Preparation Technical Assistance Grant (PHRD) for the Cultural Heritage, Tourism and Urban Development Project (US$700,000). Further information on ongoing and pipeline The Grant finances the Project preparation activities, projects can be found at: supporting the design of proposed project Compo- http://www4.worldbank.org/sprojects/ nent 1 (Urban Revitalization Improvements) and Third Quarter 2006 17 THE INTERNATIONAL FINANCE CORPORATION'S ACTIVITIES IN JORDAN The International Finance Corporation (IFC) has Privatization and Encouraging historically experienced solid demand for financ- Private Participation in ing from successful private sector companies in Jordan. In recent years, however, there has been a Infrastructure decline in the portfolio due to competition (cheap- er alternative financing) and excess liquidity in At the request of the Government of Jordan (GOJ), the market--which has resulted in prepayments IFC became the lead advisor to the GOJ on the Re- and cancellations. In 2005, IFC established a new habilitation and Expansion of the Queen Alia Inter- field office in Amman to accelerate its invest- national Airport Project (QAIA). The GOJ is seek- ments and technical assistance business develop- ing private participation in the project through in- ment activities, enhance the relationship with the ternational tendering. IFC is leading two teams of private sector and the government, and improve legal and technical consultants to appraise the Proj- coordination and collaboration with IBRD and the ect, prepare the Strategic Options Report to the GOJ, donor community. market the Project to prospective investors, and im- plement the Tender, leading to the GOJ's selection IFC's strategy in Jordan places a high priority on of the winning bidder. IFC's role is to bring to bear seeking new investment opportunities in the fol- its global experience in similar transactions, ensure lowing areas: (i) promoting export-oriented and transparency and best practices, and help with ad- foreign exchange generating investments, partic- equately marketing the Project. ularly in manufacturing and services; (ii) encour- aging private participation in infrastructure; (iii) In response to GOJ's request, IFC conducted a study attracting foreign private investment, particularly to assess the feasibility of privatizing Royal Jordanian to the Aqaba Special Economic Zone (ASEZA); Airlines.Therecommendationsofthestudyconfirmed (iv) developing the financial sector through pro- thatitistimelytomoveforwardwiththeprivatization. moting housing finance, microfinance, and trade IFC is expected to take a lead advisory role. finance; and (v) contributing to improving the pri- vate provision of health and education, and sup- In the power sector, IFC has expressed, in principle, port for the tourism and ICT sectors. In addition, its intent to finance the winning bidder of the first as a result of the establishment of IFC's regional Independent Power Plant (IPP) project in East Am- Technical Assistance (TA) facility--the Private man. The short listing and prequalification process Enterprise Partnership (PEP-MENA)--TA ac- is underway. tivities in Jordan have significantly increased covering a wide range of areas that contribute to Financial Sector Development private sector development. These activities are being strategically selected and positioned to fill IFC's involvement in developing the financial sector gaps, complement what other organizations and in Jordan will cover the following areas: donors are doing, respond to client demands, and ensure effective implementation. With this wider (a) Leasing: This TA includes reviewing the legal range of products that IFC can offer, a coherent and regulatory framework for leasing in Jordan, pro- country strategy has been formulated to utilize viding capacity building and training to existing and new opportunities. new leasing institutions, raising public awareness on leasing and its importance to small and medium The following sections highlight the various areas ofenterprises' access to finance, and promoting invest- IFC's current and future activities in Jordan. ments in this sector. 18 Third Quarter 2006 (b) Corporate Governance for Banks: In partner- to these investments will seek to diversify the ex- ship with the Association of Banks in Jordan, this posure, provide long-term debt financing, and take project will involve working with commercial banks selective equity stakes. to survey their corporate governance practices and develop a voluntary corporate governance code. Furthermore, IFC will closely work with the Aqaba Special Economic Zone and Aqaba Development (c) Microfinance: IFC's involvement will include: Corporation to facilitate new foreign investments to (a) a possible investment with one of the existing Aqaba and explore potential IFC financing of some MFIstohelpwithitsexpansionandthedevelopment of these investments. of new lending products including micro-leasing; (b) the funding of a study to determine the feasibility of Supporting the SME Sector and Improving the Busi- establishing a new for-profit MFI in Jordan; and (c) ness Enabling Environment working with the Consultative Group to Assist the Poorest and other donors to assist GOJ in improving SME development is a priority for the GOJ and the legal and regulatory framework for Microfinance IFC. In this regard, IFC has partnered with three and to improve the implementation of the National private training providers to promote and use Microfinance Strategy. IFC's role in this sector will IFC's SME management training product «Busi- encourage competition, expand MFIs' client reach ness Edge». This Training of Trainers Program and products, and help in the establishment of a con- entails certifying local trainers and providing them ducive legal and regulatory framework. with 36 working books covering a wide range of managerial, operational, financial, strategic, and (d) Housing Finance: To stimulate the Housing Fi- marketing topics to use in their various training nance market in Jordan, IFC is exploring the oppor- programs targeting the owners of SMEs. One fo- tunity to invest in this sector with the objective of cus of this program is to target women owners of expanding the provision of housing finance. IFC will SMEs. also work with the relevant stakeholders, including regional and international banks to establish institu- To enhance the environment for doing business tions that can provide securitization and mortgage in Jordan, IFC, in collaboration with the Ministry insurance which are expected to play a significant of Trade and Industry, is embarking on a project role in developing the housing finance market. aiming to improve the procedures and systems for inspections in the country. In addition, based on (e) IFC will also provide support to assist the es- the 2006 Doing Business Report findings, IFC is tablishment of a Credit Bureau in Jordan, as well as working with Jordan's Investment Board to re- provide Trade Financing to Jordanian banks from view the Doing Business Indicators for Jordan to its Global Trade Finance Program (GTFP). verify the findings and better reflect the situation on the ground in preparation for the 2007 Doing Supporting Private Sector Business Report. Development through Prioritized Investments Portfolio Performance In addition to the above-mentioned investments IFC's total committed portfolio in Jordan stands at in the financial sector, IFC stepped up its business US$59 million in 11 companies. In FY05, IFC com- development efforts to explore new investment op- mitted US$25 million, and in FY06, the expected portunities with new local private sponsors. During commitment is US$18 million. Portfolio perfor- FY02-05, IFC committed US$60 million to four in- mance has been generally good. Extensive efforts vestments. New investments in FY06-10 will focus have been devoted, however, to improve the status on the shipping and logistics, health, manufacturing, of three projects in the manufacturing and agribusi- ICT, financial, and tourism sectors. IFC's approach ness sectors. Recovery and restructuring options are being considered. Third Quarter 2006 19 Bank Lending To Jordan ­ Fact Sheet Net Flows and Net Transfers Disbursements Projects Approved by Fiscal Year 20 Third Quarter 2006 NEWS, RECENT AND UPCOMING ACTIVITIES Engaging the Diaspora to Deal with Brain Drain The Brain Drain, or the migration of skilled and efficient workforces that have, in turn, provided a educated individuals from one nation to another, platform for economic growth. is first and foremost a response to lack of oppor- tunities at home. This phenomenon has adversely The website deals with the issues related to affected many countries, especially in Africa, management of diaspora and dealing with brain where retaining capacity is often a more important drain, providing papers, case studies and specific issue than capacity development itself. However, websites. in recent years, countries like India and China, which have exported their brightest for decades, have started to reverse this trend. Studies show that effectively managing the diaspora has played For more information, please visit: a large role in capacity development by creating www.worldbank.org/civilsociety jobs, raising incomes and generating disciplined, Privatization Database The Privatization Database pro- tization Transactions database, which only covered vides information on more than the years 1990 through 1999. 9,000 transactions in developing countries from 1988 to 2003. The This data represents the best efforts of a research data was originally compiled for team and should not be seen as a fully comprehen- the paper «Privatization: Trends sive resource. Some transactions have inevitably and Recent Developments.» been missed. The data on this site will be periodi- cally updated. The site was created in response to growing de- mand for updated and consolidated information on privatization transactions in developing countries. Prior to this effort the most comprehensive infor- For more information, please visit: mation could be found on the World Bank's Priva- http://rru.worldbank.org/Privatization/ Emerging Market Blog ­ Reducing Poverty, Improving Lives Innovations in Emerging Markets is a blog spon- Objective: sored by the International Finance Corporation. It compiles knowledge, news, and ideas about · To share knowledge related to sustainable busi- sustainable business innovations and trends by ness innovations and practices by firms and en- firms and entrepreneurs operating in emerging trepreneurs operating in emerging markets. markets. The blog is informal and represents the opinions of the bloggers, not IFC, or the World · To highlight topics, trends, debates, articles, and Bank Group. best practice by firms applying sustainable pri- vate investment principles. Third Quarter 2006 21 · To provide a link between IFC's resources on ions of IFC, the World Bank Group, its Board of Di- sustainable private sector investment and tech- rectors or the governments they represent. For more nical assistance in emerging markets and global information, please see our content policy above. communities of practice. Categories: The Innovations in Emerging Markets blog is main- tained by the International Finance Corporation (IFC)'sCorporateRelationsunittoleveragetheshar- · Capital Flows ing of knowledge between IFC and communities of · Corporate Governance practice on enterprise innovations in emerging mar- · Financial Markets kets. IFC is the private sector arm of the World Bank · Going Global Group. Its mission is to promote sustainable private · Green Finance sector investment in developing countries, helping · International Financial Reporting Standards to reduce poverty and improve people's lives. · South-to-South Investing All of the Innovations in Emerging Markets blog authors are members of IFC and the World Bank Group. Their views are their own, and do not neces- For more information, please visit: sarily reflect the formal or official views and opin- http://ifcblog.ifc.org/ Youthink! ­ Tips 4Teachers Teachers are moving Role play: Write a group play (or individual plays) toward two exciting on a chosen issue. areas in education: Create ads: Create a message to explain the giv- multimedia and international development. Below en issue (or to support one side of the issue). This are some ideas to help bring the latest global devel- could be a poster, postcard, radio or TV public ser- opment issues into the classroom. vice announcement, slogan, etc. Write a letter: React to an article from a local pa- Link Youthink! topics to National Standards per by contacting its editor. and Curricula. Draw links between the topic at hand and your national standards and curriculum. Rewrite: Turn a newspaper article into a dialogue How does Youthink! fit in with the National Stan- between TV anchors. dards and curricular requirements to help your stu- Present: Present findings to your classmates. dents develop research capabilities? Draw:Createacomicstriptoexplainhowthenews issue takes effect. Research and Follow-up. As a follow-up to You- Email: Ask students to send their comments to think! stories, ask students to research, obtain and Youthink! They may be published on the Get In- read articles on the same subject in local or national volved comments page! newspapers. The students could summarize the found articles and explain how they relate to the Youthink! article. For more information, please visit: http://youthink.worldbank.org/ Class Activities for Students Debate: Divide students into two groups to debate a presented topic. 22 Third Quarter 2006 RECENT WORLD BANK PUBLICATIONS MENA Publications Paper compares the long term impact of raising do- mestic competition with that of reducing import tar- iffs. Simulation results suggest that Lebanon would 2006 Economic Developments and Prospects: largely benefit from the reduction of anti-competi- Financial Markets in a New Age of Oil. This is tive practices. the second annual issue of the World Bank's Mid- dle East and North Africa (MENA) Economic De- Governance and Private Investment in the Mid- velopments and Prospects Report, highlighting the dle East and North Africa (Working Paper Series recent key economic developments, as well as the 3934). This Paper addresses the issue of the low forces underlying the region's economic outcomes. level of private investment in the Middle East and It analyzes MENA's medium term growth prospects North Africa region, with special emphasis on the given global forecasts, and charts the region's prog- role of governance. Based on the existing literature, ress with implementing comprehensive structural the Paper categorizes what types of governance in- reforms needed for longer-term growth. As with stitutions are more detrimental to entrepreneurial last year, the 2006 MEDP also examines a theme investments. It then estimates a simultaneous mod- of particular importance to the region, with this el of private investment and governance quality year's theme devoted to regional financial markets. where economic policies concurrently explain both With oil prices continuing their soaring advances, variables. The empirical results show that gover- the efficiency with which the region channels the nance plays a significant role in private investment oil-related resources into the real economy will decisions. This result is particularly true in the case depend critically upon financial sectors. It is, thus, of «administrative quality» in the form of control of particularly opportune to examine the state of the corruption, bureaucratic quality, investment-friend- region's financial systems to understand how they ly profile of administration, and law and order, as are poised to meet some of the region's develop- well as for «political stability.» ment challenges. Recent Publications on Jordan: Total Factor Productivity in Tunisian Manufac- turing Sector--Convergence or Catch-up with Jordan--Country Assistance Strategy (Report OECD Members? (Working Paper Series No 45). No. 35665-JO). The Report analyzes the total factor productivity for six Tunisian manufacturing sectors: food pro- Jordan--Supporting Stable Development in a cessing, electrical and metal products, chemical ac- Challenging Region--A Joint World Bank-Is- tivities, textiles, clothing and leather, building ma- lamic Development Bank Evaluation (ISBN: terials and ceramics, miscellaneous products. 0-8213-5782-4 SKU: 15782). Trade and Investment Integration of the Strategic Options for Energy Sector Develop- Maghreb (Working Paper Series No. 44). The ment (Report No. 32281). Paper discusses a trade strategy for the Maghreb Jordan--Poverty Assessment (Report No. countries, with a particular focus on regional initia- 33802). tives, as trade expansion could generate higher and sustained growth rates, and employment. Seawater and Brackish Water Desalination in the Middle East, North Africa and Central Lebanon--Trade and Competition Policies Asia--A Review of Key Issues and Experience for Growth: a General Equilibrium Analysis in Six Countries (Report No. 33515). (Working Paper Series No. 43). Using recent data on concentration indexes, the Paper estimates that Morocco--Fostering Productive Diversi- rents accruing from monopolistic positions repre- fica-tion to Higher Growth and Employment: sent more than 16 percent of GDP in Lebanon. The Country Economic Memorandum. Third Quarter 2006 23 Rebuilding Iraq: Economic Reform and Tran- The book is written in simple user friendly lan- sition guage to facilitate a wider readership by policy makers and practitioners in addition to students Project Appraisal Documents for ongoing proj- and scholars of public finance, economics and ects, Implementation Completion Reports for politics. closed projects, and Project Information Docu- ments for projects under preparation are also The Other Half of Gender: Men's Issues in De- available on-line. velopment (ISBN: 0-8213-6505-3 SKU: 16505). The Other Half of Gender brings the gender and development debate full circle - from a much- Bank Publications needed focus on empowering women to a more comprehensive gender framework that considers Do Workers' Remittances Promote Financial gender as a system that affects both women and Development? (Working Paper Series 3957). men. It draws on a slowly emerging realization Workers' remittances to developing countries that attaining the vision of gender equality will have become the second largest type of flows be difficult, if not impossible, without changing after foreign direct investment. The authors use the ways in which masculinities are defined and data on workers' remittance flows to 99 devel- acted upon. oping countries from 1975-2003 to study the impact of remittances on financial sector devel- opment. In particular, they examine whether re- mittances contribute to increasing the aggregate World Bank documents can be accessed at level of deposits and credit intermediated by the the World Bank Public Information Center local banking sector. This is an important ques- located at: tion considering the extensive literature that has Jordan Public Information Center documented the growth-enhancing and poverty- Department of Public Libraries reducing effects of financial development. The Greater Amman Municipality findings provide strong support for the notion Downtown, Next to the Roman Amphitheater that remittances promote financial development Phone: 962-6-4627718/9 in developing countries. To order by phone or fax: Emerging Capital Markets and Globalization Phone: 1-800-645-7247 or 703-661-1580; (ISBN: 0-8213-6543-6 SKU: 16543). This book Fax: 703-661-1501 sheds light on the analytical, empirical, and policy To order on-line: dimensions of a basic stylized fact that the devel- opment of local capital markets in most of Lat- http://publications.worldbank.org/ecommerce/ in America has been quite poor relative to other E-mail: books@worldbank.org emerging economies and to global trends. Impor- Research and working papers are also avail- tantly, it discusses the implications for the capital able in electronic format free-of-charge at: market reform agenda going forward, emphasiz- http://econ.worldbank.org/ ing the need for revisions to the prevalent policy paradigm. To access the World Bank e-Library, an on- line, fully cross-searchable portal of over Local Governance in Developing Countries 3,000 World Bank documents, please visit: (ISBN: 0-8213-6565-7 SKU: 16565). This book www.worldbank.org/elibrary provides a new institutional economics perspec- tive on alternative models of local governance, Podcasts available at: offering a comprehensive view of local govern- http://podcasts.worldbank.org ment organization and finance in the developing world. The experiences of ten developing/tran- sition economies are reviewed to draw lessons of general interest in strengthening responsive, responsible, and accountable local governance. 24 Third Quarter 2006