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Alexandra Fotiou and Andresa Lagerborg
Following the Great Lockdown in 2020, it is important to take stock of lessons learned. How effective have different containment measures been in slowing the spread of Covid-19? Have containment measures been costly in terms of economic growth, fiscal balances, and accumulated debt? This paper finds that countries with previous SARS experience acted fast and "smart", and were able to contain the virus by relying mainly on public health measures ─ testing, contact tracing, and public information campaigns ─ rather than stay-at-home requirements. Using past coronavirus outbreaks as an instrumental variable, we show that countries with past experience were able to contain the virus in a smart way, reducing transmission and deaths while also experiencing higher economic growth in 2020.
Victoriia Alekhina and Mr. Giovanni Ganelli
Over the past decades ASEAN countries have experienced rapid economic growth accompanied by a dramatic fall in poverty rates, but income inequality has not retreated. This research aims at identifying factors which could contribute to more equally distributed growth in ASEAN. To measure inclusive growth, we use a variable integrating per capita income growth and an equity index. A cross-country panel analysis of the impact of macro-structural factors on inclusive growth and its two components suggests that fiscal redistribution, female labor force participation, productivity growth, FDI inflows, digitalization, and savings significantly drive inclusive growth. A scenario analysis based on our econometric results suggests that the implementation of fiscal redistribution and labor market-oriented structural reforms could help significantly accelerate inclusive growth in ASEAN.
Manoj Atolia, Mr. Prakash Loungani, Milton Marquis, and Mr. Chris Papageorgiou
This paper takes a fresh look at the current theories of structural transformation and the role of private and public fundamentals in the process. It summarizes some representative past and current experiences of various countries vis-a-vis structural transformation with a focus on the roles of manufacturing, policy, and the international environment in shaping the trajectory of structural transformation. The salient aspects of the current debate on premature deindustrialization and its relation to a middle-income trap are described as they relate to the path of structural transformation. Conclusions are drawn regarding prospective future paths for structural transformation and development policies.
Ms. Dalia S Hakura, Mr. Mumtaz Hussain, Ms. Monique Newiak, Mr. Vimal V Thakoor, and Mr. Fan Yang
A growing body of empirical evidence suggests that inequality—income or gender related—can impede economic growth. Using dynamic panel regressions and new time series data, this paper finds that both income and gender inequalities, including from legal gender-based restrictions, are jointly negatively associated with per capita GDP growth. Examining the relationship for countries at different stages of development, we find that this effect prevails mainly in lower income countries. In particular, per capita income growth in sub-Saharan Africa could be higher by as much as 0.9 percentage points on average if inequality was reduced to the levels observed in the fastgrowing emerging Asian countries. High levels of income inequality in sub-Saharan Africa appear partly driven by structural features. However, the paper’s findings show that policies that influence the opportunities of low-income households and women to participate in economic activities also matter and, therefore, if well-designed and targeted, could play a role in alleviating inequalities.
Diego A. Cerdeiro
In February 2016, twelve Pacific Rim countries signed the agreement on the Trans Pacific Partnership (TPP), one of the largest and most comprehensive trade deals in history. While there are several estimates of the likely effects of the TPP, there is no systematic study on the effects on all Latin American countries. We present the results from applying a multi-sector model with perfect competition presented by Costinot and Rodriguez-Clare (2014). The exercise, based on input-output data for 189 countries and 26 sectors, shows that (i) Asian TPP members are estimated to benefit most from the agreement, (ii) negative spillovers to non-TPP LAC countries appear to be of a different order of magnitude than the gains of members, and (iii) some non-TPP LAC countries may experience relatively large benefits from joining the TPP. As a cautionary note, however, we point out that even a cursory cross-study comparison shows that there is considerable uncertainty regarding the potential effects of the TPP for both members and non-members.
Bill Battaile and Mr. Saurabh Mishra
This paper provides an empirical benchmarking of growth, productivity and export patterns for developing NREs against other low and middle income developing countries, to inform policy discussions and future analytical work. There is stark heterogeneity in the association of resource sector and overall growth outcomes, by commodity and degree of dependence. Over the long term, inter-sectoral growth dynamics have been more muted for NREs than other developing countries, especially at lower incomes. Despite productivity convergence in mining, as expected, productivity growth in manufacturing and services was generally lower in NREs. Exceptions are few, in East Asia and the CIS area which experienced broad-based productivity growth. NRE product exports are more concentrated and relatively less complex, though we find increasingly diversified service export baskets. Technological progress and specialization in trade in services may offer diversification options for the future.
International Monetary Fund
The review of PRGT eligibility continues to be guided by the principles of maintaining a transparent, rules-based, and parsimonious framework—ensuring uniformity of treatment across members in similar situations while taking appropriate account of country-specific circumstances. The graduation policy seeks to maintain broad alignment with the World Bank’s IDA graduation practices, while also remaining consistent with the principle of ensuring the self-sustainability of the PRGT’s lending capacity over time. The paper concludes that the existing framework remains broadly appropriate, but could be enhanced in a few areas, including: Making use of additional data sources, namely the IMF BEL database, in assessing that a country has durable and substantial market access, supplementing the current reliance on the World Bank’s IDS database that is produced with a significant lag; Sharpening the specification of circumstances under which the presence of serious short-term vulnerabilities would justify non-graduation of a country that meets the income graduation criterion. This would entail limiting the application of the serious short-term vulnerabilities criterion for countries that exceed the applicable income graduation threshold by 50 percent or more.
Mr. Alfred Schipke

Abstract

With a combined population of more than 350 million people, frontier and developing Asia, which includes countries such as Vietnam, Cambodia, and Bangladesh, is located in the world’s fastest-growing region and has favorable demographics. The countries share a number of common macroeconom