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Biometrics, foreign aid, Africa, economics of resource-rich countries, growth and development, transition economies
Alan Gelb is a senior fellow at the Center for Global Development. His recent research includes aid and development outcomes, the transition from planned to market economies, the development applications of biometric ID technology, and the special development challenges of resource-rich countries.
He was previously director of development policy at the World Bank and chief economist for the bank’s Africa region and staff director for the 1996 World Development Report “From Plan to Market.”
This paper argues for approaches that increase public understanding of the need for prudent spending of oil revenues in booms, and for comprehensive consideration of a range of options for using rents. Drawing on the experience of a few successful countries, it points to a number of common factors that seem to be important in enabling countries to obtain a positive payoff from resource wealth. These include a strong concern for social stability and growth, a capable and engaged technocracy, and interests in the non-oil sectors able to act as agents of restraint.
The U.S. financial reform bill passed by the Senate today and now headed to President Obama for his signature will have far reaching impact on poor people in the developing world if it succeeds in reducing the severity of future financial crises. But even if it fails in this regard, a provision requiring oil, gas and mining companies registered with the Securities and Exchange Commission (SEC) to publicly disclose their tax and revenue payments to governments around the world could be a big boost for increased transparency in countries afflicted with what has come to be called “the resource curse.”
According to its website, the United Nations Educational, Scientific and Cultural Organization (UNESCO) has stopped accepting nominations for its UNESCO-Obiang Nguema Mbasogo International Prize for Research in the Life Sciences. But we are guessing that the applicant pool remains quite small. Frankly, who would want his or her name affiliated with one of Africa’s worst dictators? Besides UNESCO, that is.
Why do so many businesses choose to remain informal? Vijaya Ramachandran and co-authors discover that the answer is more nuanced than often believed. In East Africa, for instance, the difference in productivity between formal and informal firms is often indistinguishable, while in Southern Africa productivity it is more differentiated. Policies to encourage formalization and increase productivity are likely to be more successful in East Africa, whereas an emphasis on job training and vocational skills might be more appropriate in Southern Africa.
Book Launch: Africa's Private Sector
WASHINGTON,D.C.(March 23, 2009)- More than half of African businesses lack access to reliable electricity but with vastly greater solar potential than Western Europe, Africa could become the Saudi Arabia of solar energy, meeting not only the needs of its businesses and households but also exporting electricity to Europe.
Industrialized countries using fossil-fuel power and now face the dual challenge of transitioning to low-carbon renewable sources while trying to meet their energy needs. Africa, which faces a significant and urgent shortage of power, can meet its energy needs by leapfrogging directly to a 21st century low carbon economy, according to a new book from the Center for Global Development (CGD).
The book Africa’s Private Sector: What’s Wrong with the Business Environment and What to Do About It by Vijaya Ramachandran, Alan Gelb, and Manju Kedia Shah, draws on survey results from 5,000 African businesses across 29 countries, plus new analysis of Africa’s solar potential.
In the surveys, African entrepreneurs were asked to identify the biggest impediments to their success. Lack of reliable power topped the list—in many countries power outages occur more than half the working days each year—followed closely by inadequate roads and burdensome business regulations.
These problems can be fixed through the combined efforts of African governments, domestic and foreign investors, and technical assistance, said Ramachandran. Leapfrogging to solar electricity and other renewable sources offers the biggest chance for progress and profit, she said.
“Just as Africa skipped landlines and went directly to mobile phones, the same thing could happen with power,” she said.
The book also draws on the work of CGD senior fellow David Wheeler which shows that Africa has 9 times the solar energy potential of Europe—an annual equivalent of 100 million tons of oil. Africa also has vast reserves of wind, geothermal and hydroelectric power--with adequate investments in solar thermal and other renewable energy, the continent can meet its own needs and export electricity to Europe.
Business-owners surveyed across the continent also identified the lack of adequate roads as a major problem. Businesses that try to supply markets beyond their immediate vicinity on average lose nearly 6 percent of the value of their goods to transport costs.
Decades of underinvestment in infrastructure have resulted in a very uneven playing field for small businesses that are trying to survive and grow across the continent.
“African economies are growing in large part due to foreign direct investments but the domestic investment is lagging,” CGD board member James Harmon writes in a foreward to the book. “A strong private sector in Africa is central to creating jobs and economic growth in Africa.”
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Notes to Editors
The Center for Global Development (CGD) is an independent, non-profit policy research organization dedicated to reducing global poverty and inequality and to making globalization work for the poor. Through a combination of research and strategic outreach, the Center engages policymakers and the public to influence the policies of the United States, other rich countries, and such institutions as the World Bank, the IMF, and the World Trade Organization to improve the economic and social development prospects in poor countries.