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Ms. Manuela Goretti
,
Mr. Daisaku Kihara
,
Mr. Ranil M Salgado
, and
Ms. Anne Marie Gulde
Since the mid-1980s, durable reforms coupled with prudent macroeconomic management have brought steady progress to the South Asia region, making it one of the world’s fastest growing regions. Real GDP growth has steadily increased from an average of about 3 percent in the 1970s to 7 percent over the last decade. Although growth trajectories varied across countries, reforms supported strong per capita income growth in the region, lifting over 200 million people out of poverty in the last three decades. Today, South Asia accounts for one-fifth of the world’s population and, thanks to India’s increasing performance, contributes to over 15 percent of global growth. Looking ahead, the authors find that South Asia is poised to play an even bigger role in the global economy, in both relative and absolute terms. India has overtaken China as the fastest growing large economy and South Asia’s contribution to global growth is set to increase, while more mature economies decelerate. Greater economic diversification, with an expansion of the service sector, improvements in education, and a still sizable demographic dividend are among the key elements underpinning this performance. Based on demographic trends, more than 150 million people in the region are expected to enter the labor market by 2030. This young and large workforce can be South Asia’s strength, if supported by a successful high-quality and job-rich growth strategy. Amid a changing global economic landscape, the authors argue that South Asia will need to leverage on all sectors of the economy in a balanced way, supporting improvements in agricultural productivity and a sustainable expansion of manufacturing, while promoting higher-skill services, to achieve this goal.
Wilfried A. Kouamé
and
Mr. Sampawende J Tapsoba
This paper assesses the effects of structural reforms on firm-level productivity for 37 developing countries from 2006 to 2014 period. It takes advantage of the IMF Monitoring of Fund Arrangements dataset for reform indexes and the World Bank Enterprise Surveys for firm-level productivity. The paper highlights the following results. Structural reforms such as financial, fiscal, real sector, and trade reforms, significantly improve firm-level productivity. Interestingly, real sector reforms have the most sizeable effects on firm-level productivity. The relationship between structural reforms and firm-level productivity is nonlinear and shaped by some firms’ characteristics such as the financial access, the distortionary environment, and the size of firms. The pace of structural reforms matters since being a “strong reformer” is associated with a clear productivity dividend for firms. Finally, except for financial and trade reforms, all structural reforms under consideration are bilaterally complementary in improving firm-level productivity. These findings are robust to several sensitivity checks.
Ms. Louise Fox
,
Mr. Alun H. Thomas
, and
Cleary Haines
This paper provides the most complete analysis of the structural transformation among low- and low-middle-income countries in sub-Saharan Africa to date.
International Monetary Fund. African Dept.
Ce document de la série des questions générales se penche sur l'évaluation de l'activité économique du Togo en l'absence de séries trimestrielles du PIB. Le Togo recueille environ 40 indicateurs macroéconomiques mensuels qui couvrent un grand nombre de secteurs de l'économie. La sélection de variables à inclure dans l'indice d'activité économique est faite en trouvant la meilleure combinaison. Les indicateurs sont agrégés dans un indice à l’aide d'une méthodologie utilisée par le Conference Board des États-Unis. Ceci permet d'établir un indice d'activité économique qui reproduit bien l'évolution des taux de croissance du PIB réel au Togo. L’indice sélectionné réduit au minimum les écarts entre le taux de croissance de l'indicateur et celui du PIB réel effectif sur la période 2002–13.
International Monetary Fund. African Dept.
This Selected Issues paper discusses the assessment of economic activity in Togo in absence of quarterly GDP series. Togo collects about 40 macroeconomic indicators monthly that span a wide range of sectors of the economy. The selection of the variables for the economic activity index is conducted by finding the combination of variables. The indicators are aggregated into an index using a methodology used by the Conference Board. Then an economic activity index is constructed that effectively replicates the historical growth rates of real GDP in Togo. The selected index minimizes the deviations between the growth rates of the indicator and actual real GDP growth over 2002–13.
International Monetary Fund
This Selected Issues paper on Sri Lanka underlies the dynamics of growth and external competitiveness. The slowdown in the contribution of sectors that are labor intensive, together with faster growth in sectors that are capital intensive and have higher productivity levels, resulted in total factor productivity (TFP) as the main contributor to growth. Sri Lanka’s strong growth performance has brought positive benefits to the economy and has benefited from a high quality labor force. The labor productivity is low by regional standards and the internal terms of trade are skewed toward the nontraded sector.
Pierre-Olivier Gourinchas
and
Mr. Olivier D Jeanne
Standard theoretical arguments tell us that countries with relatively little capital benefit from financial integration as foreign capital flows in and speeds up the process of income convergence. We show in a calibrated neoclassical model that conventionally measured welfare gains from this type of convergence appear relatively limited for developing countries. The welfare gain from switching from financial autarky to perfect capital mobility is roughly equivalent to a 1 percent permanent increase in domestic consumption for the typical non-OECD country. This is negligible relative to the welfare gain from a take-off in domestic productivity of the magnitude observed in some of these countries.
International Monetary Fund
This Selected Issues paper and Statistical Appendix on Pakistan looks at the worrisome trend of declining growth from a growth-accounting point of view. The paper provides considerable evidence that Pakistan’s striking “social gap” in education and health is indeed a main culprit for a weakening growth performance. It looks at the financial sector as an additional area that is central for growth and governance, and where reforms are well advanced. The paper also analyzes how to ensure a continuation of prudent fiscal policies in Pakistan that would reduce public debt to more sustainable levels.