A large share of cross-country differences in productivity is explained by differences in agricultural productivity. Using a combination of sub-national agricultural statistics and geospatial datasets on crop-specific potential yields, we study the main drivers of this variation from a macroeconomic perspective. We find that differences in geographically-induced crop-specific comparative advantages can explain a substantial share of the variation in yields across the world. Data reveal substantial gaps between potential and observed yields in most countries. When decomposing these within country gaps, we find that crop selection gaps are on average larger than those induced by input usage alone. The results highlight the importance of understanding the interaction of geography and crop selection drivers in assessing aggregate agricultural productivity differences.
This paper discusses Cabo Verde’s 2019 Article IV Consultation and Request for an Eighteen-Month Policy Coordination Instrument (PCI). The PCI aims at bolstering macroeconomic stability through fiscal consolidation and growth-enhancing reforms to support medium-term fiscal and debt sustainability. Policy discussions and the PCI-supported program focused on achieving medium-term fiscal and debt sustainability; modernizing the monetary policy framework and continuing to build precautionary reserves; bolstering the financial system resilience; restructuring lossmaking State-Owned Enterprises; and advancing structural reforms to support private sector-led growth. The medium-term outlook is positive although risks are tilted to the downside. Economic growth is projected to remain robust while the fiscal and external positions are expected to improve further, underpinned by growth and programmed structural reforms.
This Selected Issues paper focuses on the prospects of growth in São Tomé and Príncipe (STP). This case study seeks explanations for STP’s relative under-performance and draws lessons for the future. It compares past economic developments in the islands and recommends policies that could most effectively foster future growth in STP. Country-specific characteristics as well as weak institutions contributed to STP’s relative underperformance since independence. Initial conditions, particularly regarding human capital and natural resources, contributed to STP’s relative underperformance, especially in the first decade after independence. Experience in the four island-states suggests that fiscal discipline, revenue mobilization, and a more active private sector, particularly in the tourism sector, may be key to tap STP’s growth potential. Fiscal discipline is needed to contain the fiscal deficit and bring the debt to a sustainable level. Continuing to strengthen public financial management, including implementing multiannual fiscal framework as recommended by the IMF technical assistance, would help.
This book describes the reforms needed to move small middle-income countries in sub-Saharan Africa to advanced-economy status. The result of intense discussions with public officials in the countries covered, the book blends rigorous theory, econometrics, and practitioners' insights to come up with practical recommendations for policymakers. It spans topics from macroeconomic vulnerability and reserve adequacy to labor market institutions and financial inclusion. The book is a must-read for researchers interested in the economic issues facing developing countries in sub-Saharan Africa.
This Joint Staff Advisory Note focuses on the Poverty Reduction Strategy Paper–II for Cape Verde. Important progress was made in poverty reduction, but rural poverty still remains high. The strategy reports that Cape Verde is on track to meet the Millennium Development Goal of halving extreme poverty by 2015. Despite progress made to date, the gap between urban and rural income growth is still wide; thus, efforts to raise rural incomes further and a more effective design of social inclusion programs are needed.
This Selected Issues paper examines macroeconomic challenges for a highly tourism-based economy such as Cape Verde. The changing structure of Cape Verde’s balance-of-payments financing calls for a closer look at the volatility of remittances and their role as an absorber of economic shocks. The paper finds that compared with other external inflows, remittances continue to be a reliable source of foreign financing, but they are declining in importance. It also shows that this influence seems to be gradually fading, and remittances are becoming increasingly procyclical.
Over the last several years, Cape Verde has achieved a major economic transformation that is a tribute to its sound homegrown economic reform program. This 2008 Article IV Consultation highlights that real per capita GDP in Cape Verde has increased on average by more than 7 percent a year since 2001, faster than most small island economies and the average for sub-Saharan Africa. Policy implementation under the Policy Support Instrument (PSI) is also strong. All PSI quantitative assessment criteria for end-December 2007 were met with wide margins.