This paper discusses the results of a survey of multinational corporations with affiliates in developing countries. The paper explores corporate perspectives and decision making across the stages of the investment cycle: attraction, entry and establishment, operations and expansion, linkages with the local economy, and, in some cases, divestment and exit.
... See More + Through interviews with 754 executives, the survey finds that political stability and a business-friendly regulatory environment are the top two factors influencing multinational corporations' investment decisions in developing countries. Investors seek predictable, transparent, and efficient conduct of public agencies. The survey results also show that investors are heterogeneous, and their perceptions vary with motivation and size. Multinational corporations that are involved in efficiency-seeking investment are more selective than investors motivated by other considerations, and that relatively smaller multinational corporations are more sensitive to host country characteristics and investment climate factors than large firms.
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Policy Research Working Paper WPS8386 MAR 28, 2018
This note supplements note 6: screening prospective investors. The investment screening process requires suitable tools for assisting government agencies in their work.
... See More + This note provides examples of tools that government agencies can adapt to their national context and use to develop the technical capacity to screen and select investors.
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The World Bank Group recently adopted the "cascade framework" to "maximize finance for development." The cascade recommends that reforms be tried first, followed by subsidies, and then public investments.
... See More + To understand the economics of the cascade, this paper presents a model where reforms, subsidies, and public investments can be used to fill the investment gap, and computes the welfare associated with their different sequencing. The cascade is optimal when reforms increase efficiency at no cost. When they are costly, if policies can be project specific, their sequencing does not matter; if not, the cascade can be optimal if agents are myopic, but not if they are forward-looking. Tensions may thus arise between maximizing private financing and optimizing financing for development.
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Policy Research Working Paper WPS8320 JAN 29, 2018
Despite sustained economic growth over the past two decades, Sub-Saharan Africa faces massive challenges and significant gaps in many development outcomes.
... See More + Although poverty has been declining, a recent report estimates that over two-fifths of the African population was poor in 2012. Nearly two-thirds of Africans do not have electricity. Less than one quarter of African enterprises have loans or lines of credit; the corresponding share among firms in non-African developing countries is almost half. The use of formal financial services is concentrated among the richest 20 percent of the population. Most African countries have made significant gains in access to education, but learning remains weak. The agriculture sector, which employs a large share of the labor force, exhibits low productivity. Technological change and levels, which are the drivers of productivity, are much lower compared to other parts of the world. Even simple productivity-enhancing factors like the use of fertilizers has remained flat for decades. Africa’s large infrastructure, technology, and policy gaps require disruptive solutions and thinking outside of the box. Yet, development policies have often been primarily programmatic and mostly incremental. This book argues that it is time to go back to basics of development, think big, and foster the environment for more innovation and technology adoption, to provide the chance for Africa to experience major positive transformations. This is not a new idea; to the contrary, it is what economic theory and history teach. While it has become customary in the development practice to highlight and quantify constraints to investing in Africa, this book argues that those constraints must be and transformed into investment opportunities. Several factors, such as skills, service delivery, access to finance, energy, to name the few, are often pointed out as constraints to investment. Treating those constraints as investment opportunities, attracting the private sector, both domestic and foreign, and creating a conducive environment for technological diffusion is precisely how Africa will harness innovation toward its prosperity.
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The development objective of the Community Support Program Project for Kyrgyz Republic is to engage communities in the development of social and economic infrastructure in order to enhance services, livelihoods and inclusion in target villages near the CASA-1000 transmission line.
... See More + Some of the negative impacts and mitigation measures are includes : (i) local construction and environmental inspectorates, as well as local residents, were notified of upcoming work; (ii) The Contractor formally agrees that all work will be carried out in a disciplined and safe manner and will be organized so as to minimize the impact on local people and the natural environment; (iii) waste demolition, excavated soil and fillers will be stored in a specially designated area, and will also be moistened to prevent dust formation; (iv) preventing soil and construction debris from entering surrounding areas (sidewalks, roads) to avoid the spread of dust; (v) construction noise is allowed only at the set time in accordance with the permission received for the work; (vi) to confirm the proper collection and disposal in accordance with the project, garbage collection will be recorded; (vii) uncontrolled diversion of groundwater, discharge of waste water, cement slurry or any contaminated water into underground or adjacent streams or rivers is not permitted; the contractor will receive the necessary licenses and permits for collection of water and controlled discharge to public sewage systems; (viii) removing asbestos (if removal is necessary), it will be treated with a moisturizing compound to reduce the formation of asbestos dust; (ix) transportation of waste will be carried out by specialized licensed carriers with disposal at established facilities.
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Ratings for the Investment Promotion and Financing Facility Project for Bangladesh were as follows: outcomes were satisfactory, risk to development outcome was moderate, Bank performance was moderately satisfactory, and Borrower performance was satisfactory.
... See More + Some lessons learned included: the learning by implementing design is a good practice that can support complex projects in difficult environments to navigate implementation challenges. The use of investment promotion and financing facility (IPFF) resources depended on the speed with which infrastructure projects under preparation reach the financing stage, availability of alternative financing sources, and the credit quality of these projects in comparison with IPFF requirements. The project considered the market conditions and accordingly restructured the project five times. A simple institutional structure is necessary to support the project’s market driven approach. Good governance and market credibility were the focus of the design of the implementation arrangements. A comprehensive technical assistance (TA) component must include a training program for the implementing agency staff as well as environment and safety (E and S) risk management capacity building from project inception to anticipate the challenges with environmental compliance in the subprojects. Early involvement from the private sector to better assess the demand for infrastructure finance is crucial.
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Implementation Completion and Results Report ICR4145 JUN 27, 2017
Stagnant global trade, subdued investment, and heightened policy uncertainty marked another difficult year for the world economy. A moderate recovery is expected for 2017, with receding obstacles to activity in commodity exporters and solid domestic demand in commodity importers.
... See More + Weak investment is weighing on medium-term prospects across many emerging markets and developing economies (EMDEs). Although fiscal stimulus in major economies, if implemented, may boost global growth above expectations, risks to growth forecasts remain tilted to the downside. Important downside risks stem from heightened policy uncertainty in major economies.
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This summary version of report provides a snapshot of the Chinese market. To better acknowledge the current state and future potential of sustainable investment (SI) in China, IFC engaged Business for Social Responsibility’s Beijing office (BSR) to undertake a review of the SI industry and enabling market conditions in China.
... See More + BSR partnered with the People’s Bank of China (the Central Bank) to analyze China’s financial markets, regulatory framework, and SI market infrastructure. BSR also conducted approximately 100 interviews with government agencies, institutional investors, asset managers, equity research, and academics.
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Ratings for the Local Development Investment Funds Project for Vietnam were as follows: outcomes were moderately satisfactory, risk to development outcome was moderate, Bank performance was moderately satisfactory, and Borrower performance was moderately satisfactory.
... See More + Some lessons learned included: the operating parameters of a wholesale financial intermediary (FI) operation must be anchored on comprehensive economic and financial analyses. The presence of an enabling policy environment to implement a specific type of investment under an FI operation must be a prerequisite before inclusion in the project design. The utilization of a qualification system for determining the potential borrowers in an FI operation increases operational flexibility. Maintaining a strong focus on the long-term sustainability of the project outcomes is critical in the context of a wholesale FI operation. The implementation of a sustained capacity building and technical assistance (TA) program for stakeholders across the various levels of a FI operation is essential.
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Implementation Completion and Results Report ICR3993 DEC 27, 2016
This Country Economic Memorandum (CEM) focuses on the challenges Turkey faces in accumulating productive assets that would enable the economy to grow and incomes to converge with high-income countries.
... See More + This report shows that Turkey’s capital stock is relatively low, and economic growth will largely depend on its ability to improve factor accumulation and boost productivity through structural reforms. The report provides detailed analyses of specific aspects of the three types of assets discussed above: the housing aspects of infrastructure investment, tertiary education for upgrading human capital, and the quality of institutions as determinants of FDI. This report analyzes investment in these types of assets. The report is arranged as follows: Chapter 2 gives an overview of aggregate sectoral, private, public, and foreign investment in Turkey. Chapter 3 analyses Turkey’s housing sector, looking at the provision of housing, juxtaposing supply and demand and financing of both developers and buyers. Chapter 4 discusses developments and challenges in the tertiary education sector highlighting the relations between the governance and financing of education institutions and their performance and quality. Chapter 5 provides evidence for the impacts and determinants of FDI, and its two-way relationship with migration.
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Costa Rica is a small, middle-income country with substantial exposure to natural disasters, including earthquakes, floods, hurricanes, landslides, and volcanic eruptions.
... See More + According to a World Bank funded natural disaster study, Costa Rica ranks number two in the world among countries most exposed to multiple hazards, with 80 percent of the country's Gross Domestic Product, or GDP and 78 percent of Costa Rica's population in high-risk areas. Costa Rica has built an efficient disaster response system and established an effective system of building codes, environmental standards, and land use planning to mitigate the impact of natural disasters. It has also made substantial progress in strengthening its institutional and legal framework and mainstreaming catastrophe risk management in its national development program.
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The movement from a defined benefit to a defined contribution pension system has important implications in the area of portfolio allocation. While the focus of defined benefit pension funds is essentially in the long term, some defined contribution funds might have incentives to invest with shorter-term horizons.
... See More + The case of open pension funds, such as the ones in several countries in Latin America and Central and Eastern European countries, shows that competition on short-term returns may bring pension funds into suboptimal portfolio strategies. As policy makers become increasingly interested in finding long-term sources of financing for infrastructure and other long-term projects, it becomes essential to upgrade the regulatory framework of open pension funds. This paper contributes to the literature by proposing an investment regulatory framework based on strategic asset allocation that can be applicable to open pension funds. Based on the use of lifecycle investment strategies, the paper proposes the implementation of common portfolio benchmarks for pension funds. Three elements are emphasized for implementation of strategic asset allocation: (a) a well-defined pension objective, (b) sound governance of the portfolio benchmark, and (c) a methodology for developing the benchmark. The paper proposes the use of the approximation methodology as a starting point for designing portfolio benchmarks, and illustrates step-by-step how to build these long-term portfolios in a didactical way.
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Policy Research Working Paper WPS7784 AUG 04, 2016
The study focuses on themes and areas that have been identified as highly relevant for the modernization and commercialization of the agriculture sector.
... See More + The study originally aimed to review: agricultural marketing, processing and exports; food safety; agricultural “cooperation,” including farmers’ groups; agricultural extension and agricultural insurance. This coverage was subsequently modified to: (i) avoid repetition of existing work; (ii) draw more extensively on WBG experience in other countries; (iii) address relevant long-term issues more directly; and (iv) to inform discussion of relevant issues on which little information was available. The proposed review of marketing, processing and exports, an area that has already been well studied – was thus replaced with a review of global experience in developing successful export-led agricultural industries. Similarly, the study of agricultural ‘cooperation,’ an area also widely studied, was replaced with an analysis of agricultural land markets. Both “cooperation” and land markets are highly pertinent to the need to increase farm size to improve competitiveness. Land markets offer a more structural, long-term response to this problem, however, a response that so far has received little attention. Finally, an analysis of public expenditure on agriculture was added to provide insight into public expenditure on long-term versus short-term sector objectives. The review outlines the elements of a long-term framework based on building a cluster-based, institutional framework for horticultural exports, and suggests the need to prioritize associated development of agricultural extension, food safety, agricultural land markets and agricultural risk management. Horticulture is viewed as a vector for modernization and commercialization, due to its demonstrated potential for exports. The proposed framework would drive growth and change throughout the sector, however, due to the sector-wide impact of support for extension, food safety, land markets and risk management.
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