Marcelo M. Giugale

The day after tomorrow : a handbook on the future of economic policy in the developing world

Development economists are paid to look into the future. They ask not only how things work today, but also how a new policy, program, or project will make them work tomorrow. They view the world and history as a learning process, past and present are just inputs into thinking about whats coming. It is that appetite for a vision of the future that led us to invite some 40 development economists, most of them from the World Banks poverty reduction and economic management network, an epicenter of the profession, to tell us what they see on the horizon of their technical disciplines and of their geographic areas of specialization. The timing could not be better. The 2008-09 global financial crises shook the ground under the conventional wisdom that had been held as true for decades. From what the role of governments should be in markets to which countries will be the engines of the worlds economy, from what people need to leave poverty to what businesses need to stay competitive, it is all up for reexamination. This synthesis provides an account of what the author heard. It is not meant to be comprehensive. Instead, it picks from each chapter what is new, what is likely to change, and what will be different in the future.

Collecting high frequency panel data in Africa using mobile phone interviews

Abstract As mobile phone ownership rates have risen in Africa, there is increased interest in using mobile telephony as a data collection platform. This paper draws on two pilot projects that use mobile phone interviews for data collection in Tanzania and South Sudan. In both cases, high frequency panel data have been collected on a wide range of topics in a manner that is cost effective, flexible and rapid. Attrition has been problematic in both surveys, but can be explained by the resource and organisational constraints that both surveys faced. We analyse the drivers of attrition to generate ideas for how to improve performance in future mobile phone surveys.

Ecuador : an economic and social agenda in the new millennium

The book focuses on three overarching themes: fiscal consolidation and growth; social development; and, quality of government, and, documents Ecuadors development trends, policies, and options. The fundamental challenges facing the country are identified within this book, and the solutions represent a break with the past: this is a proposal for an agenda with a broad, and integrated vision of economic, and social development in Ecuador. As a central message, the book outlines that although economic growth is a necessary condition to combat poverty, it would however be insufficient, unless growth is sustainable, and participatory, i.e., that broad sectors of the most vulnerable population (such as marginalized indigenous populations) are included. Thus, the argument for preserving stability with fiscal discipline, and accelerating growth with competitiveness, is based on a guaranteed balanced macroeconomic framework, that promotes economic expansion and competitiveness by making input markets - particularly the labor market - more flexible, by opening the economy to foreign trade, and eliminating trade policies. Expansion of the petroleum sector should be accelerated through legal and regulatory changes to prod fiscal stability, and promote private investments. Boosting sustainable, and equitable social development can be ensured by the government through actions focused on human capital development, improved quality of education and health services, and efficient social safety network. And in building a quality government that serves its people, and fights against corruption, the book stipulates regulatory reforms, and provision of direct services, within a strategy complemented with strengthened civil service, and deepening of the judicial reform, in the general context of decentralization.

Capital Inflow Reversals, Banking Stability, and Prudential Regulation in Central and Eastern Europe

The authors show that capital inflows into the countries of Central and Eastern Europe (CEE)--inflows that are mainly private, debt-driven, and increasingly supplied by banks on a shortening maturity--are especially vulnerable to reversals. They show that the regions banking systems are disproportionately exposed to those reversals, and absorb the lions share of bank-supplied inflows. They analyze the main links through which external finance turbulence is transmitted to the domestic banking industry, especially during the transition. Mechanisms for prudential regulation are in place in the region--and largely mimic the standards directed by the European Union--but the authors argue that these standards are insufficient for CEE countries. They base their arguments not on actual enforcement (a genuine concern) but on the fact that EU banking directives were designed for more stable economies and for banking systems less vulnerable to reversals in capital inflows. A strong case can be made, for CEE countries to overshoot those directives, at least until the transition is complete.

The Case for Direct Transfers of Resource Revenues in Africa

Noting that Africa’s resource-rich countries have not translated their wealth into sustained economic growth and poverty reduction, this paper shows that by transferring a portion of resource-related government revenues uniformly and universally as direct payments to the population, some countries could increase both private consumption and the provision of public goods, and thereby reduce poverty and enhance social welfare. We make the case based on theoretical considerations and explore how these direct dividend payments would look in practice in a group of selected African countries.

A New Model for Market-Based Regulation of Subnational Borrowing : The Mexican Approach

Faced with weak sub-national finances that pose a risk to macroeconomic stability, Mexicos federal government in April 2000 established an innovative incentive framework to bring fiscal discipline to state and municipal governments. That framework is based on two pillars: an explicit renunciation of federal bail-outs, and a Basel-consistent link between the capital-risk weighting of bank loans to sub-national governments, and the borrowers credit rating. In theory, this new regulatory arrangement should reduce moral hazard among banks and their state, and municipal clients; differentiate interest rates on the basis of the borrowers creditworthiness; and, elicit a strong demand for institutional development at the sub-national level. But its access will depend on three factors critical to implementation: 1) Whether markets find the federal commitment not to bail out defaulting sub-national governments credible. 2) Whether sub-national governments have access to financing other than bank loans. 3) How well bank capital rules are enforced.

Revisiting Ecuador's economic and social agenda in an evolving landscape

The policy notes for Ecuador are part of a series of books that the Bank prepares periodically summarizing its accumulated knowledge on the economic and social issues of member countries. The timing of the notes, early 2007, coincides with a new presidential period, which offers the country the opportunity to consolidate many of the gains of the past few years, while building the basis for a more dynamic, equitable and inclusive growth process. The analysis contained in the policy notes indicates that Ecuador is a country with great potential, with a society that has exhibited incredible resilience and the ability to adapt to new challenges. The Ecuadoran society has overcome adversity with great determination in the past few years. Periodic economic crises, external shocks, and even natural disasters tested the countrys ability to cope with difficulties. Despite these challenges, the country has maintained a forward-looking perspective and has achieved some important goals. Economic stability in the past few years has given Ecuador the opportunity for a period of sustained economic growth. During this period several development indicators have improved, and several sectors of the economy have demonstrated the dynamism and entrepreneurship that are present the Ecuadoran culture. In general, surveys show that Ecuadorans feel that their individual conditions are likely to improve in the future. The notes cover many areas and subjects but are grouped into three broad themes: preserving stability and accelerating growth, promoting sustainable and equitable social development, and improving governance and strengthening institutions. The remainder of this chapter summarizes the main findings and recommendations of the policy notes.

Africa's Macroeconomic Story

Much of Sub-Saharan Africas post-independence macroeconomic history has been characterized by boom-bust cycles. Growth accelerations have been common, but short lived. Weak policy formulation and implementation led to large external and fiscal imbalances, excessive debt accumulation, volatile inflation, and sharp exchange rate fluctuations. This characterization changed, however, in the mid-1990s, when debt relief and better macroeconomic policy began to provide a source of stability that has helped sustain robust growth throughout much of the region. In resource rich countries, the process was supported over the past few years by a dramatic increase in commodity prices. But resources are only one part of the story. Growth has exhibited impressive resilience even in the face of negative external shocks, as in 2008-2009. While the short-term outlook remains positive, over the medium term policy makers face new challenges. Several countries have the potential to greatly expand natural resource production and become major commodity exporters; volatile resource revenue will complicate their fiscal and monetary planning. Rising investor appetite for financial assets of frontier markets and the development of domestic debt markets will continue to broaden the menu of and trade-offs among financing options at a time when global interest rates may start sloping upward. Complex financing arrangements -- notably for private-public or public-public partnerships in infrastructure -- will become more common and will generate new types of fiscal commitments and contingencies.