Source: Zimbabwe budget unlikely to ease economic crisis - Reuters.com
Zimbabwe is planning to release its budget this week. However, analysts say that the new budget will unlikely help the economic crisis that is currently plaguing the country.
The Zimbabwean economy has shrunk 40 percent over the last six years and inflation has shot up to 1,070 percent. And it is predicted by the International Monetary Fund that it will rise to over 4,000 percent in 2007. In addition, the budget deficit, which was predicted to drop to 4.6 percent of GDP from 5 percent in 2005, is likely to be off target after the government adopted a supplementary budget in July 2006 which was three times the original 2006 budget.
Experts say that the country is doomed if it doesn’t fix certain problems. These problems include private property rights, government firms that run at a loss, and black markets in which the US dollar is selling at over six times its official value. In addition, the country is suffering from a food shortage, a high unemployment rate, and a lack of fuel and foreign currency.
Questions:
What steps should be taken to address these problems?
Are there certain problems that should be dealt with before others?
Wednesday, November 29, 2006
“Call of Nature” Business Opportunity in Nigeria
Source: Answering the call of nature in Lagos - BBC.com
The continent of Africa is becoming a less risky place to do business. Because of this, many inhabitants of the continent have discovered business opportunities and have successfully taken advantage of them.
Isaac Durojaiye of Nigeria has found a way to benefit by providing public toilets. Nigeria has a population of over 130 million, but only had about 500 public toilets in the entire country when Durojaiye decided to start the business.
Durojaiye named this business Dignified Mobile Toilets. The business charges approximately 20 Nigerian naira per usage and each toilet gets about 100 uses per day. On average the business generates $15 a day in profit.
Dignified Mobile Toilets also charges for advertising on the toilets themselves. The business generates 25% of its revenue from this advertising. In addition, the company plans to implement a program of recycling the waste collected to generate bio-gas, electricity and fertilizer for farmers.
Question:
What other business opportunities may be available in Africa that may not have been available past due to the risky business environment of the continent?
The continent of Africa is becoming a less risky place to do business. Because of this, many inhabitants of the continent have discovered business opportunities and have successfully taken advantage of them.
Isaac Durojaiye of Nigeria has found a way to benefit by providing public toilets. Nigeria has a population of over 130 million, but only had about 500 public toilets in the entire country when Durojaiye decided to start the business.
Durojaiye named this business Dignified Mobile Toilets. The business charges approximately 20 Nigerian naira per usage and each toilet gets about 100 uses per day. On average the business generates $15 a day in profit.
Dignified Mobile Toilets also charges for advertising on the toilets themselves. The business generates 25% of its revenue from this advertising. In addition, the company plans to implement a program of recycling the waste collected to generate bio-gas, electricity and fertilizer for farmers.
Question:
What other business opportunities may be available in Africa that may not have been available past due to the risky business environment of the continent?
Monday, November 27, 2006
Ecuador's Post-Election Bond Risk
Sources: Bloomberg, Ecuador Bonds Riskiest, Credit-Default Swaps Indicate; BBC News, Ecuador Leftist Correa Leads Vote.
Leftist-candidate Rafeal Correa declared himself the winner of the Ecuadorian presidential election on November 27, garnering sixty-seven percent of the vote with just slightly over fifty percent of the ballots counted. Upon that declaration, Ecuador became the riskiest country in the world for bondholders, surpassing Lebanon (#2) and Argentina (#3). There are many factors that contribute to the risk of a bond, including the bond quality, or the likelihood that the issuer will be able to pay back the bondholder. The greater the likelihood that the bond will be paid on time, the higher the quality of the bond and the less risk involved.
Ecuador’s increased risk stems, in part, from Correa’s recent announcements that he would consider defaulting on much of the country’s $11 billion sovereign debt if elected. See Ecuadorian Presidential Candidate Plans to Cut Ties with World Bank and IMF and Ecuadorian Candidate Creates Unease Over Debt. Additionally, despite the increased risk for bondholders, Correa seems to care very little; “[i]f country risk goes up because of speculators worrying over ability to pay the debt, I don't care . . . The country risk I care about is children suffering.”
Ecuador’s risk is evaluated based on the cost of credit-default swaps. Credit-default swaps are “financial instruments based on bonds and loans that are used to speculate on [an issuer’s] ability to repay debt.” Essentially, they protect bondholders by allowing the holder to buy insurance against the default of the third party, in this case Ecuador. If Ecuador defaults, the bondholder will be able to recover the face-value of the bond because the party providing the insurance will have to buy the bond from the holder. The cost of credit-default swaps increased fifty-five percent from $313,000 to $483,000, the increase in price indicating the perception of the quality of the bond is declining.
Question:
(1) What are the disadvantages for Mr. Correa of not paying attention to the country’s risk rating, if any? Are there problems with measuring risk by the credit-default swaps? Are they accurate measures?
Leftist-candidate Rafeal Correa declared himself the winner of the Ecuadorian presidential election on November 27, garnering sixty-seven percent of the vote with just slightly over fifty percent of the ballots counted. Upon that declaration, Ecuador became the riskiest country in the world for bondholders, surpassing Lebanon (#2) and Argentina (#3). There are many factors that contribute to the risk of a bond, including the bond quality, or the likelihood that the issuer will be able to pay back the bondholder. The greater the likelihood that the bond will be paid on time, the higher the quality of the bond and the less risk involved.
Ecuador’s increased risk stems, in part, from Correa’s recent announcements that he would consider defaulting on much of the country’s $11 billion sovereign debt if elected. See Ecuadorian Presidential Candidate Plans to Cut Ties with World Bank and IMF and Ecuadorian Candidate Creates Unease Over Debt. Additionally, despite the increased risk for bondholders, Correa seems to care very little; “[i]f country risk goes up because of speculators worrying over ability to pay the debt, I don't care . . . The country risk I care about is children suffering.”
Ecuador’s risk is evaluated based on the cost of credit-default swaps. Credit-default swaps are “financial instruments based on bonds and loans that are used to speculate on [an issuer’s] ability to repay debt.” Essentially, they protect bondholders by allowing the holder to buy insurance against the default of the third party, in this case Ecuador. If Ecuador defaults, the bondholder will be able to recover the face-value of the bond because the party providing the insurance will have to buy the bond from the holder. The cost of credit-default swaps increased fifty-five percent from $313,000 to $483,000, the increase in price indicating the perception of the quality of the bond is declining.
Question:
(1) What are the disadvantages for Mr. Correa of not paying attention to the country’s risk rating, if any? Are there problems with measuring risk by the credit-default swaps? Are they accurate measures?
Sunday, November 26, 2006
China and Pakistan Forge Ties
Sources: CNN Financial Times
China and Pakistan have agreed to cooperate on various fronts: military, economics, trade, energy, and anti-terrorism. Chinese president Hu Jintao and the Pakistani leader General Pervez Musharraf outlined a “30-point joint statement,” which included an increased effort to boost trade, military cooperation, regional instability, etc. Most importantly, this visit and cooperation agreement assures that China is abandoning a traditional rival as China and India have begun to build a relationship. Hu stated in a national address that China’s relationship with Pakistan are “higher than the Himalayas.” On the Pakistani side, a notable leader stated: “If there is one country in the world that Pakistan trusts completely, it’s got to China. Pakistan is anxious to build up ties with China, which it sees as the world’s most important ascending political, military, and economic power.”
China agreed to assist Pakistan in its efforts to continue its nuclear program—somewhat in an affront to the United States who has recently made similar agreements with long-time Pakistani rival, India. However, Hu pledged to help the nuclear power Pakistan resolve its longstanding conflict with India, especially over the Kashmir region.
Moreover, the trade agreements are projected to boost bilateral economic activity to at least $15 billion—a threefold increase from current levels of trade.
Finally, China and Pakistan have embarked upon some ambitious defense agreements. The two nations have been working on a joint fighter aircraft—known as the FC-1 (in China) or the JF-17 (in Pakistan). Furthermore, the two countries have embarked on a “joint development airborne early warning and control system” aircraft, as well as develop a “state of the art Defense Electronics Complex,” to be run jointly run by Pakistani and Chinese defense groups.
Question: With growing US cooperation with Pakistan on military/anti-terrorism affairs, how may these new agreements between Pakistan and China, the greatest “threat” to US economic superiority, affect cooperation between the US and Pakistan?
China and Pakistan have agreed to cooperate on various fronts: military, economics, trade, energy, and anti-terrorism. Chinese president Hu Jintao and the Pakistani leader General Pervez Musharraf outlined a “30-point joint statement,” which included an increased effort to boost trade, military cooperation, regional instability, etc. Most importantly, this visit and cooperation agreement assures that China is abandoning a traditional rival as China and India have begun to build a relationship. Hu stated in a national address that China’s relationship with Pakistan are “higher than the Himalayas.” On the Pakistani side, a notable leader stated: “If there is one country in the world that Pakistan trusts completely, it’s got to China. Pakistan is anxious to build up ties with China, which it sees as the world’s most important ascending political, military, and economic power.”
China agreed to assist Pakistan in its efforts to continue its nuclear program—somewhat in an affront to the United States who has recently made similar agreements with long-time Pakistani rival, India. However, Hu pledged to help the nuclear power Pakistan resolve its longstanding conflict with India, especially over the Kashmir region.
Moreover, the trade agreements are projected to boost bilateral economic activity to at least $15 billion—a threefold increase from current levels of trade.
Finally, China and Pakistan have embarked upon some ambitious defense agreements. The two nations have been working on a joint fighter aircraft—known as the FC-1 (in China) or the JF-17 (in Pakistan). Furthermore, the two countries have embarked on a “joint development airborne early warning and control system” aircraft, as well as develop a “state of the art Defense Electronics Complex,” to be run jointly run by Pakistani and Chinese defense groups.
Question: With growing US cooperation with Pakistan on military/anti-terrorism affairs, how may these new agreements between Pakistan and China, the greatest “threat” to US economic superiority, affect cooperation between the US and Pakistan?
Ecuadorian Presidential Candidate Plans to Cut Ties with World Bank and IMF
Source: Ecuador's Correa vows to slash World Bank, IMF ties
Ecuadorean presidential candidate Rafael Correa announced that if elected, he plans to buy back and restructure the country's debt with multilateral organizations, including the World Bank and International Monetary Fund (IMF). Correa told foreign reports that “with the extra oil revenues, we have the capacity to buy back our debt with the IMF. But I insist, I would even be willing to issue more expensive debt to pay off the IMF because it has done us so much harm.”
His plan is fueled by his goal “to minimize ‘harmful’ ties” with the organization. In order to do this, Correa says he will seek “an extension of maturities so we [Ecuador] can pay them until the last cent.” Correa also promised that if elected he plans to renegotiate oil contracts to significantly increase the amount of crude Ecuador receives from private oil companies.
Correa’s competition for presidency is Alvaro Noboa, the country's richest man, who is currently leading, according to recent polls. Noboa has hinted that he plans to swap more expensive debt for cheaper bonds at better terms, but he has not given many more details on his debt policy.
Questions:
1. Correa’s promises to restructure Ecuador’s foreign debt and boost social spending to aid the country’s poor majority have rattled Wall Street. What global effects can you foresee if Correa wins the presidency and follows through with his plans?
2. What concerns the United States and other global financial leaders regarding Correa’s plans to sever ties with the World Bank and the IMF? How much of an impact would this have on these institutions?
Ecuadorean presidential candidate Rafael Correa announced that if elected, he plans to buy back and restructure the country's debt with multilateral organizations, including the World Bank and International Monetary Fund (IMF). Correa told foreign reports that “with the extra oil revenues, we have the capacity to buy back our debt with the IMF. But I insist, I would even be willing to issue more expensive debt to pay off the IMF because it has done us so much harm.”
His plan is fueled by his goal “to minimize ‘harmful’ ties” with the organization. In order to do this, Correa says he will seek “an extension of maturities so we [Ecuador] can pay them until the last cent.” Correa also promised that if elected he plans to renegotiate oil contracts to significantly increase the amount of crude Ecuador receives from private oil companies.
Correa’s competition for presidency is Alvaro Noboa, the country's richest man, who is currently leading, according to recent polls. Noboa has hinted that he plans to swap more expensive debt for cheaper bonds at better terms, but he has not given many more details on his debt policy.
Questions:
1. Correa’s promises to restructure Ecuador’s foreign debt and boost social spending to aid the country’s poor majority have rattled Wall Street. What global effects can you foresee if Correa wins the presidency and follows through with his plans?
2. What concerns the United States and other global financial leaders regarding Correa’s plans to sever ties with the World Bank and the IMF? How much of an impact would this have on these institutions?
EU to Expand Regional Influence
Source: EU to work harder at being a good neighbour - FT.com
Benita Ferrero-Waldner, EU External Relations Commissioner, is expected to unveil an upgraded “neighborhood policy” this week. The proposal includes several new initiatives designed to improve relations between
Ms. Ferror-Waldner’s plan has several goals. She seeks comprehensive free trade agreements with neighboring countries that cover non-tariff barriers. She proposes a simpler visa regime to facilitate travel to and from
Questions:
Is the EU’s plan to expand its influence into neighboring countries a good idea? Will the EU’s efforts to stabilize these countries create goodwill or engender greater conflict?
EU and African Nations Adopt Joint Declaration on African Migration
Sources:
Funds Cloud Africa Migrant Talks
Gaddafi: Migration ‘inevitable’
EU Back Away from Migration Fund
Ministers from more than 50 countries in Europe and Africa attended a two-day conference in Libya aimed at finding a common stance on both legal and illegal immigration. The delegates sought ways to address issues like the protection of refugees and joint border patrols. The two day meeting is the first of its kind to be held on the issue.
After two days of talks, a joint declaration was adopted aimed at curtailing the flow of illegal migrants to Europe. The ministers have pledged to cooperate to tackle illegal immigration through development and border control.
“Illegal or irregular immigration cannot be addressed solely from a security perspective,” European and African leaders said in the joint statement.
Side-stepped from the declaration were African calls for a special multi-billion dollar fund provided by the EU. African ministers said that such a fund would finance development projects to prevent young Africans seeking a better life in Europe. Libya called on the EU to give Africa $10 billion per year in development projects to prevent people from leaving their countries. Libyan Foreign Minister Abdelrahmane Chalgham said the development money was needed to combat poverty, which was fueling migration, and the problem could not be solved by repressive measures alone.
Morocco proposed a “joint fund with voluntary contributions” to develop projects in African countries, but its Foreign Minister Mohamed Benaissa said European representatives were not keen.
Finnish Foreign Minister Erkki Tuomioja, whose country currently holds the EU presidency, stressed that “the EU’s commitment to African development is total.”
Both Libya and Morocco, main staging posts for migrants leaving Africa, have called on the EU to ensure that tighter border controls are complemented by development projects in African states. Europe has repeatedly asked these two countries to tighten their borders.
This year, Spanish authorities detained 28,000 people in the Canary Islands, while 16,000 were held on the Italian island of Lampedusa.
Questions:
Libyan leader, Muammar Gaddafi, told African and European government ministers that resisting migration "is like rowing against the stream". Is he right in that cross-border migration is inevitable? Should Europe accept the migration? If not, how should Europe and Africa deal with increasing migration?
Funds Cloud Africa Migrant Talks
Gaddafi: Migration ‘inevitable’
EU Back Away from Migration Fund
Ministers from more than 50 countries in Europe and Africa attended a two-day conference in Libya aimed at finding a common stance on both legal and illegal immigration. The delegates sought ways to address issues like the protection of refugees and joint border patrols. The two day meeting is the first of its kind to be held on the issue.
After two days of talks, a joint declaration was adopted aimed at curtailing the flow of illegal migrants to Europe. The ministers have pledged to cooperate to tackle illegal immigration through development and border control.
“Illegal or irregular immigration cannot be addressed solely from a security perspective,” European and African leaders said in the joint statement.
Side-stepped from the declaration were African calls for a special multi-billion dollar fund provided by the EU. African ministers said that such a fund would finance development projects to prevent young Africans seeking a better life in Europe. Libya called on the EU to give Africa $10 billion per year in development projects to prevent people from leaving their countries. Libyan Foreign Minister Abdelrahmane Chalgham said the development money was needed to combat poverty, which was fueling migration, and the problem could not be solved by repressive measures alone.
Morocco proposed a “joint fund with voluntary contributions” to develop projects in African countries, but its Foreign Minister Mohamed Benaissa said European representatives were not keen.
Finnish Foreign Minister Erkki Tuomioja, whose country currently holds the EU presidency, stressed that “the EU’s commitment to African development is total.”
Both Libya and Morocco, main staging posts for migrants leaving Africa, have called on the EU to ensure that tighter border controls are complemented by development projects in African states. Europe has repeatedly asked these two countries to tighten their borders.
This year, Spanish authorities detained 28,000 people in the Canary Islands, while 16,000 were held on the Italian island of Lampedusa.
Questions:
Libyan leader, Muammar Gaddafi, told African and European government ministers that resisting migration "is like rowing against the stream". Is he right in that cross-border migration is inevitable? Should Europe accept the migration? If not, how should Europe and Africa deal with increasing migration?
Saturday, November 25, 2006
Nasdaq attempts to takeover London Stock Exchange
Source: Mayor joins fight to halt Nasdaq bid for London - Guardian
The UK’s Office of Fair Traiding, at the behest of London’s Mayor, Ken Livingstone, is set to investigate a takeover bid by the U.S. based Nasdaq of the London Stock Exchange. The London Mayor believes there is reason to refer Nasdaq’s £2.7bn offer over to the Competition Commission – a commission with the power to completely block the proposed take-over.
The Mayor further believes that, given the fact that the NYSE, Nasdaq and the LSE represent a major part of the world’s stock exchanges requires a serious inquiry into such a bid – a bid that would significantly reduce competition amongst stock exchanges. Experts believe that the bid was prompted by America’s loss to the LSE of several foreign listings as a result of the crippling US rules under Sarbanes-Oxley (a Federal law passed in response to several corporate and accounting scandals, such as that with Enron). Livingstone further fears that the LSE would not be able to avoid heavy-handed American regulation.
Meanwhile, the LSE is seeking allies to thwart the potential takeover by the Americans, including OMX of Sweden. According to Livingstone, this year the LSE “raised £22.3bn in [listings of new companies]” compared to just £6.4bn raised by Nasdaq.
Question:
- Would an American takeover of the UK’s LSE prove to be more beneficial than harmful? If so, would it benefit mainly Americans, or those involved from all sides?
The UK’s Office of Fair Traiding, at the behest of London’s Mayor, Ken Livingstone, is set to investigate a takeover bid by the U.S. based Nasdaq of the London Stock Exchange. The London Mayor believes there is reason to refer Nasdaq’s £2.7bn offer over to the Competition Commission – a commission with the power to completely block the proposed take-over.
The Mayor further believes that, given the fact that the NYSE, Nasdaq and the LSE represent a major part of the world’s stock exchanges requires a serious inquiry into such a bid – a bid that would significantly reduce competition amongst stock exchanges. Experts believe that the bid was prompted by America’s loss to the LSE of several foreign listings as a result of the crippling US rules under Sarbanes-Oxley (a Federal law passed in response to several corporate and accounting scandals, such as that with Enron). Livingstone further fears that the LSE would not be able to avoid heavy-handed American regulation.
Meanwhile, the LSE is seeking allies to thwart the potential takeover by the Americans, including OMX of Sweden. According to Livingstone, this year the LSE “raised £22.3bn in [listings of new companies]” compared to just £6.4bn raised by Nasdaq.
Question:
- Would an American takeover of the UK’s LSE prove to be more beneficial than harmful? If so, would it benefit mainly Americans, or those involved from all sides?
China: Growing Gap Between Rich and Poor
Sources: China's Poorest Worse Off After Boom, In China, Growth at Whose Cost?
A recent study presented to China by World Bank economists shows that China's fantastic economic growth has come at the expense of China's poorest. For instance, the analysis revealed that between 2001 and 2003, the income of the poorest 10% in China fell by 2.4% while that of China's richest rose by an impressive 16%, and the economy as a whole grew by a rate of 10% per year at the time. Those 130 million Chinese at the bottom 10% earn $1 or less per day, which is the World Bank's global benchmark for poverty. Analysts are not sure yet about the reasons for the widening gap.
Bert Hofman, the World Bank's chief economist in China, reports that the majority of China's poorest seem to be only temporarily poor, losing footing after a set-back such as sudden illness or unemployment. This supports the speculation of some that the study is showing the natural consequences of the reforms China employed to transition the economy out of state control, many of which entailed sacrificing much of its social-welfare system. Some believe that the situation in China will shed much light on the "trickle-down" theory of economics, which formed the basis of China's former President Deng Xiaoping's plan to rise China out of the state of poverty it suffered under Communist principles. Nearly thirty years later, this study seems to suggest that the theory that in the process of lifting an entire nation out of poverty, "some must get rich before others," requires a much more subtle analysis.
China's current president, Hu Jintao, has made narrowing the gap between the richest and poorest central to his economic policies.
Questions:
1. What kind of policy reforms can China employ to narrow the income gap between the richest and poorest?
2. Should China redefine its standards for "poverty"? Should it take the World Bank's advice and spend more on health care, pensions, and welfare programs? Will this solve the problem?
3. Only 20%-30% of China's poorest are "long-term" poor. Do you think that the fact that most of the poorest in China are only temporarily poor is significant with regards to the value and the implications of this World Bank study?
A recent study presented to China by World Bank economists shows that China's fantastic economic growth has come at the expense of China's poorest. For instance, the analysis revealed that between 2001 and 2003, the income of the poorest 10% in China fell by 2.4% while that of China's richest rose by an impressive 16%, and the economy as a whole grew by a rate of 10% per year at the time. Those 130 million Chinese at the bottom 10% earn $1 or less per day, which is the World Bank's global benchmark for poverty. Analysts are not sure yet about the reasons for the widening gap.
Bert Hofman, the World Bank's chief economist in China, reports that the majority of China's poorest seem to be only temporarily poor, losing footing after a set-back such as sudden illness or unemployment. This supports the speculation of some that the study is showing the natural consequences of the reforms China employed to transition the economy out of state control, many of which entailed sacrificing much of its social-welfare system. Some believe that the situation in China will shed much light on the "trickle-down" theory of economics, which formed the basis of China's former President Deng Xiaoping's plan to rise China out of the state of poverty it suffered under Communist principles. Nearly thirty years later, this study seems to suggest that the theory that in the process of lifting an entire nation out of poverty, "some must get rich before others," requires a much more subtle analysis.
China's current president, Hu Jintao, has made narrowing the gap between the richest and poorest central to his economic policies.
Questions:
1. What kind of policy reforms can China employ to narrow the income gap between the richest and poorest?
2. Should China redefine its standards for "poverty"? Should it take the World Bank's advice and spend more on health care, pensions, and welfare programs? Will this solve the problem?
3. Only 20%-30% of China's poorest are "long-term" poor. Do you think that the fact that most of the poorest in China are only temporarily poor is significant with regards to the value and the implications of this World Bank study?
Wednesday, November 22, 2006
Egyptian Bloggers Detained by Police
Source: Egypt Arrests Another Blog Critic - BBC.com
Cairo police have recently detained a blogger who has been commenting on governmental affairs in Egypt. The blogger, Rami Siyam, was detained along with three friends after leaving the house of a fellow blogger late at night.
According to BBC Arab Affairs analyst Magdi Abdelhadi blogging in Egypt, where democratic freedoms are severely constrained, is strongly connected with political activism. Specifically, in recent times, bloggers have been commenting on the sexual harassment of women at night, in full view of police who do nothing to stop the assaults.
A recently detained blogger, Abdel Kareem Nabil, was charged with disrupting the public order, inciting religious hatred and defaming the president.
Cairo police have recently detained a blogger who has been commenting on governmental affairs in Egypt. The blogger, Rami Siyam, was detained along with three friends after leaving the house of a fellow blogger late at night.
According to BBC Arab Affairs analyst Magdi Abdelhadi blogging in Egypt, where democratic freedoms are severely constrained, is strongly connected with political activism. Specifically, in recent times, bloggers have been commenting on the sexual harassment of women at night, in full view of police who do nothing to stop the assaults.
A recently detained blogger, Abdel Kareem Nabil, was charged with disrupting the public order, inciting religious hatred and defaming the president.
Monday, November 20, 2006
Debt Relief for Five Latin American Countries
Sources: Miami Herald, Bank Pardons Billions in Debt; Bloomberg News, Bank to Forgive Latin America of $3.5 Billion; Inter-American Development Bank, Press Release.
The Board of Governors of the Inter-American Development Bank (IDB) reached an agreement on debt relief for Bolivia, Guyana, Haiti, Honduras, and Nicaragua on November 17. The debt pardon is aimed at helping the countries meet the United Nation’s Millennium Development Goals (MDG), aspirational standards aimed at decreasing global poverty by 2015. While the details of the agreement have not been fully outlined, the Board will meet again in January to decide on the specific terms of the forgiveness.
Currently, one of the issues that the group must resolve is when the loan forgiveness period will begin. A later cut-off date will result in a larger debt forgiveness package, and bank officials have estimated that establishing a December 2004 date will provide a net pardon worth $3.5 billion. This proposal would provide Bolivia with $768 million in debt relief, Guyana with $365 million, Haiti with $468 million, Honduras with $1.1 billion and Nicaragua with $808 million. An earlier loan forgiveness start date will result in approximately $2.1 billion in relief between the five countries. Under the terms of the program, in order to take advantage of the agreement, the countries will have to get the International Monetary Fund’s (IMF) approval for their particular economic program. Presently, Haiti is the only country that has not done so.
IDB officials said that there was initial resistance to the loan forgiveness in Latin America because of “concerns that the write-off would weaken the IDB’s ability to provide subsidized loans in the future.” This was particularly troublesome given the fact that the IDB is the biggest loan provider in the region. Initially, Latin American countries were looking to wealthier nations help pay for the debt relief, but in the end, the IDB decided that it was strong enough to take the financial hit. At the meeting in January, the IDB will discuss ways in which it can replenish its funds to continue to provide loans. Throughout the process, the United States was a strong advocate of the loan forgiveness and is pushing for the later cut-off date so that the net worth of the pardon is maximized.
Questions:
(1) What are some of the reasons that the United States was such a vocal advocate for the loan forgiveness? What role, if any, does the fact that Bolivia has been extremely critical of the U.S. government play in the U.S. administration’s choice to push for the financial pardons? In the same vein, did the recent election of left-wing Daniel Ortega in Nicaragua influence the decision of the U.S. government?
(2) What are the benefits of loan forgiveness? What are the downfalls? Is there a fear that the effect of the loan forgiveness will not “trickle-down” and help those who most need it? Would a better way to help these countries meet the MDGs be to spend the money on specific aid projects?
For more information on debt forgiveness see University of Iowa Center for International Finance and Development Briefing No. 1: Debt Forgiveness.
The Board of Governors of the Inter-American Development Bank (IDB) reached an agreement on debt relief for Bolivia, Guyana, Haiti, Honduras, and Nicaragua on November 17. The debt pardon is aimed at helping the countries meet the United Nation’s Millennium Development Goals (MDG), aspirational standards aimed at decreasing global poverty by 2015. While the details of the agreement have not been fully outlined, the Board will meet again in January to decide on the specific terms of the forgiveness.
Currently, one of the issues that the group must resolve is when the loan forgiveness period will begin. A later cut-off date will result in a larger debt forgiveness package, and bank officials have estimated that establishing a December 2004 date will provide a net pardon worth $3.5 billion. This proposal would provide Bolivia with $768 million in debt relief, Guyana with $365 million, Haiti with $468 million, Honduras with $1.1 billion and Nicaragua with $808 million. An earlier loan forgiveness start date will result in approximately $2.1 billion in relief between the five countries. Under the terms of the program, in order to take advantage of the agreement, the countries will have to get the International Monetary Fund’s (IMF) approval for their particular economic program. Presently, Haiti is the only country that has not done so.
IDB officials said that there was initial resistance to the loan forgiveness in Latin America because of “concerns that the write-off would weaken the IDB’s ability to provide subsidized loans in the future.” This was particularly troublesome given the fact that the IDB is the biggest loan provider in the region. Initially, Latin American countries were looking to wealthier nations help pay for the debt relief, but in the end, the IDB decided that it was strong enough to take the financial hit. At the meeting in January, the IDB will discuss ways in which it can replenish its funds to continue to provide loans. Throughout the process, the United States was a strong advocate of the loan forgiveness and is pushing for the later cut-off date so that the net worth of the pardon is maximized.
Questions:
(1) What are some of the reasons that the United States was such a vocal advocate for the loan forgiveness? What role, if any, does the fact that Bolivia has been extremely critical of the U.S. government play in the U.S. administration’s choice to push for the financial pardons? In the same vein, did the recent election of left-wing Daniel Ortega in Nicaragua influence the decision of the U.S. government?
(2) What are the benefits of loan forgiveness? What are the downfalls? Is there a fear that the effect of the loan forgiveness will not “trickle-down” and help those who most need it? Would a better way to help these countries meet the MDGs be to spend the money on specific aid projects?
For more information on debt forgiveness see University of Iowa Center for International Finance and Development Briefing No. 1: Debt Forgiveness.
Sunday, November 19, 2006
G20 Meeting Results in Push for IMF and World Bank Reforms
Sources: Finance Ministers Hone In On IMF Reform
Turkey's Voting Quota in IMF to be Increased
IMF Managing Director Rato On Turkey
G20 to continue pushing for IMF, World Bank reform
Today concluded the annual meetings of the G-20 (Group of 20 nations, including Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United States, and the European Union). Finance ministers and central bankers of these countries, as well as representatives from the World Bank and the IMF, met in Melbourne, Australia over the weekend. Today, the agenda focused on IMF reforms announced at the conclusion of the IMF/World Bank meetings in September, including IMF members voting to increase quotas (voting power in the IMF) to China, Korea, Mexico, and Turkey.
Today, the G-20 leaders promised to maintain pressure on the IMF and World Bank to continue reforms in order to “better reflect the global community.” According to Australian Treasurer Peter Costello, the current compositions of both groups reflect the post-World War II environment during which they were established. He states that they “will only be valuable as institutions if they represent the world as it’s become, not the world as it was,” which includes giving “key emerging markets a greater voice and developing countries, particularly in Africa.” Collectively, the G-20 released the following statement: “A strong, credible IMF and reflects today’s global economic realities is in our shared interest.”
IMF Managing Director Rodrigo de Rato spoke during today’s meetings. After agreeing on quota increases for the four emerging countries, Rato said that the next step will be for the IMF “to agree on a new quota which is transparent and simple.” Rato also mentioned that other countries’ voting power will likely be increased later in order to stabilize the changing global economy.
Questions:
1. Will G-20 support for the increased quota reforms and pressure resulting from this weekend’s annual meetings encourage the IMF and World Bank to make further, more liberal reforms?
2. After China, Korea, Mexico, and Turkey receive their increased voting power in the IMF, which “emerging” nations are likely to be next to receive higher quotas?
Turkey's Voting Quota in IMF to be Increased
IMF Managing Director Rato On Turkey
G20 to continue pushing for IMF, World Bank reform
Today concluded the annual meetings of the G-20 (Group of 20 nations, including Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United States, and the European Union). Finance ministers and central bankers of these countries, as well as representatives from the World Bank and the IMF, met in Melbourne, Australia over the weekend. Today, the agenda focused on IMF reforms announced at the conclusion of the IMF/World Bank meetings in September, including IMF members voting to increase quotas (voting power in the IMF) to China, Korea, Mexico, and Turkey.
Today, the G-20 leaders promised to maintain pressure on the IMF and World Bank to continue reforms in order to “better reflect the global community.” According to Australian Treasurer Peter Costello, the current compositions of both groups reflect the post-World War II environment during which they were established. He states that they “will only be valuable as institutions if they represent the world as it’s become, not the world as it was,” which includes giving “key emerging markets a greater voice and developing countries, particularly in Africa.” Collectively, the G-20 released the following statement: “A strong, credible IMF and reflects today’s global economic realities is in our shared interest.”
IMF Managing Director Rodrigo de Rato spoke during today’s meetings. After agreeing on quota increases for the four emerging countries, Rato said that the next step will be for the IMF “to agree on a new quota which is transparent and simple.” Rato also mentioned that other countries’ voting power will likely be increased later in order to stabilize the changing global economy.
Questions:
1. Will G-20 support for the increased quota reforms and pressure resulting from this weekend’s annual meetings encourage the IMF and World Bank to make further, more liberal reforms?
2. After China, Korea, Mexico, and Turkey receive their increased voting power in the IMF, which “emerging” nations are likely to be next to receive higher quotas?
APEC Meetings Update
Sources: CNN Bloomberg BBC
In the most recent meeting of Asian leaders in Vietnam, the leaders “vowed to revive moribund world trade talks” in a statement issued Sunday. World Trade Organization (WTO) talks ended in July after strong disagreement over subsidies. The talks ended in July over farm subsidies, but expressed willingness to compromise. The U.S. has not expressed a similar sentiment as the Americans and Europeans disagree on how to reduce agricultural farm subsidies. This is key for the Asian nations because APEC members account for half of the world’s global trade, and have claimed that “the consequences of the failure of the Doha round would be too grave for our economies and for the global multilateral trading system.” The leaders called restarting the Doha trade talks as “their top priority,” and leaders have agreed to “remain personally involved” in the effort to revive talks. European ministers are not nearly as optimistic as the APEC ministers.
Alternatively, if the talks are not restarted or otherwise fail, the APEC nations have established a potential “plan B.” This would be a “long-term APEC-wide trade deal. This idea is supported by the U.S., as the U.S. government called the APEC leaders as having “characteristic courage” in “agreeing to consider a region-wide free-trade agreement.
Another hot topic addressed at the APEC meetings regarded North Korea. President Bush had used this round of APEC talks to strengthen support for North Korea sanctions. Japanese Prime Minister Shinzo Abe and Mr. Bush agreed to pursue a joint missile defense program. President Bush also met with the South Korean President Roh Moo-hyun and “urged [him] to implement the sanctions.” Moreover, Bush met with president Hu Jintao in an effort to solidfy support. Despite President Bush’s encouragement, the text of the Sunday statement made no mention of North Korea’s nuclear program. However, South Korea released an additional statement, which “was very firm in the need for full-implementation” of the United Nations resolutions, and expressed “strong concern” of the North Korean nuclear ambitions.
QUESTION:
1) What potential ramifications may happen if APEC is unsuccessful at restarting the Doha talks? Moreover, with APEC controlling ½ of the world’s trade—who is hurt the most by a more “insular” Asian bloc?
2) What may happen to U.S. desires for a strong sanction against North Korea if China’s support for the sanctions lessens or completely wanes?
In the most recent meeting of Asian leaders in Vietnam, the leaders “vowed to revive moribund world trade talks” in a statement issued Sunday. World Trade Organization (WTO) talks ended in July after strong disagreement over subsidies. The talks ended in July over farm subsidies, but expressed willingness to compromise. The U.S. has not expressed a similar sentiment as the Americans and Europeans disagree on how to reduce agricultural farm subsidies. This is key for the Asian nations because APEC members account for half of the world’s global trade, and have claimed that “the consequences of the failure of the Doha round would be too grave for our economies and for the global multilateral trading system.” The leaders called restarting the Doha trade talks as “their top priority,” and leaders have agreed to “remain personally involved” in the effort to revive talks. European ministers are not nearly as optimistic as the APEC ministers.
Alternatively, if the talks are not restarted or otherwise fail, the APEC nations have established a potential “plan B.” This would be a “long-term APEC-wide trade deal. This idea is supported by the U.S., as the U.S. government called the APEC leaders as having “characteristic courage” in “agreeing to consider a region-wide free-trade agreement.
Another hot topic addressed at the APEC meetings regarded North Korea. President Bush had used this round of APEC talks to strengthen support for North Korea sanctions. Japanese Prime Minister Shinzo Abe and Mr. Bush agreed to pursue a joint missile defense program. President Bush also met with the South Korean President Roh Moo-hyun and “urged [him] to implement the sanctions.” Moreover, Bush met with president Hu Jintao in an effort to solidfy support. Despite President Bush’s encouragement, the text of the Sunday statement made no mention of North Korea’s nuclear program. However, South Korea released an additional statement, which “was very firm in the need for full-implementation” of the United Nations resolutions, and expressed “strong concern” of the North Korean nuclear ambitions.
QUESTION:
1) What potential ramifications may happen if APEC is unsuccessful at restarting the Doha talks? Moreover, with APEC controlling ½ of the world’s trade—who is hurt the most by a more “insular” Asian bloc?
2) What may happen to U.S. desires for a strong sanction against North Korea if China’s support for the sanctions lessens or completely wanes?
Further IMF Voting Reform on the Cards?
Nick Tattersall
Nov 15, 2006
At the G-20 countries 2 day meeting which began this Saturday in
However, many nations are still displeased with the voting structure. A group of 22 countries led by India plan to request the IMF to increase their voting rights during this week’s meeting of finance ministers of 20 countries. Voting shares are of critical importance since it affects each countries say in the general decisions of the IMF and how much can they borrow from it. Currently, IMF voting rights are apportioned between nations based on the size of their economy, openness to trade and other criteria.
Questions
1. How should voting rights in multilateral institutions such as the World Bank and the International Monetary Fund be divided? What bases are fair and accurate?
Air Pollution Threatening Health of Hong Kong's Economy
Sources: Hong Kong Smog Damaging Economy, Hong Kong's Market Chief Idenfities Air Pollution as a Threat to the Economy
Ronald Arculli, Chairman of Hong Kong's stock exchange, has recently acknowledged that the high levels of air pollution across China's Pearl River delta is not only threatening human health, but also the region's economic growth, and ultimately Hong Kong's market competitiveness. Hong Kong's pollution problem has received criticisms from investment bankers, international chambers of commerce, and professors in economy. The terrible air quality has caused residents to relocate to cleaner surroundings in Singapore and the Philippines and is making business professions reluctant to travel to Hong Kong. Hong Kong's chief executive, Donald Tsang, made air pollution the central theme of his annual policy address last month.
Despite identifying this problem as a threat to Hong Kong's economic standing, Arculli argues that Hong Kong maintains an open economy, an established rule of law, and is keeping head-to-head with its economic rival, Shanghai. Two years ago, Hong Kong officials set a goal to reduce air pollution by 55% by 2010; however, inconsistent monitoring and regulating has resulted in little improvement. Any improvement brought on by stricter controls on vehicle emissions in an effort to reduce traffic pollution has been negated by a general rise in air pollution as the region's economy experienced growth. Some experts are warning that unless this approach is aggressively modified and made effective, mortality and illness rates will increase and long-term economic growth will be stunted. Greenpeace conducted studies showing that the area's pollution levels exceeded international standards by over 200%.
Questions:
1. To what extent should Hong Kong shift its focus to address the air pollution crisis at the expense of efforts to develop the economy? To what extent is one goal necessary to the achivement of the other?
2. What do you think are the biggest contributing factors as to how and why Hong Kong's pollution problem got to such levels?
3. What steps will be required to get the pollution crisis under control?
Ronald Arculli, Chairman of Hong Kong's stock exchange, has recently acknowledged that the high levels of air pollution across China's Pearl River delta is not only threatening human health, but also the region's economic growth, and ultimately Hong Kong's market competitiveness. Hong Kong's pollution problem has received criticisms from investment bankers, international chambers of commerce, and professors in economy. The terrible air quality has caused residents to relocate to cleaner surroundings in Singapore and the Philippines and is making business professions reluctant to travel to Hong Kong. Hong Kong's chief executive, Donald Tsang, made air pollution the central theme of his annual policy address last month.
Despite identifying this problem as a threat to Hong Kong's economic standing, Arculli argues that Hong Kong maintains an open economy, an established rule of law, and is keeping head-to-head with its economic rival, Shanghai. Two years ago, Hong Kong officials set a goal to reduce air pollution by 55% by 2010; however, inconsistent monitoring and regulating has resulted in little improvement. Any improvement brought on by stricter controls on vehicle emissions in an effort to reduce traffic pollution has been negated by a general rise in air pollution as the region's economy experienced growth. Some experts are warning that unless this approach is aggressively modified and made effective, mortality and illness rates will increase and long-term economic growth will be stunted. Greenpeace conducted studies showing that the area's pollution levels exceeded international standards by over 200%.
Questions:
1. To what extent should Hong Kong shift its focus to address the air pollution crisis at the expense of efforts to develop the economy? To what extent is one goal necessary to the achivement of the other?
2. What do you think are the biggest contributing factors as to how and why Hong Kong's pollution problem got to such levels?
3. What steps will be required to get the pollution crisis under control?
Zimbabwe Invites White Former Farm Owners to Discuss Compensation
Sources:
Zimbabwe: Farm Invaders Lose Protection
Zimbabwe Offers Farm Compensation
Zimbabwe Says White Farmers May Seek Compensation
Zimbabwe Union Cautious About Government's Latest Compensation Offer
Zimbabwe has offered compensation to over 1,000 white farmers for property seized during the country’s controversial land reform program. Seven years ago, Zimbabwe’s President Robert Mugabe launched a controversial land reform program and took control of land owned by white farmers with the aim of redressing economic imbalances left over from the country’s British colonial rule.
Although it is estimated that 500 white farmers still remain in Zimbabwe, many have fled to neighboring countries including Zambia and Mozambique. The invitation for compensation was announced in the government-run Herald newspaper this past Thursday. The move, the first large-scale offer by the government to settle outstanding land debts, came days after Mugabe handed the first batch of 99-year land leases to beneficiaries of the reforms and warned white former farm owners not to expect compensation from the government.
The spokeswoman of the Commercial Farmers Union (CFU) in Harare, Emily Crookes, says the Union is suspicious of the latest compensation offer. She says the Zimbabwean government previously has offered less than 10 percent of the market value of buildings and equipment and no compensation at all for the land itself.
President Robert Mugabe denies claims that his government policies, including land reforms, have contributed to the country's problems. Instead he blames domestic and foreign enemies for the country's difficulties and accuses its former colonial power Britain of leading a Western campaign of economic sabotage.
Question: President Mugabe has announced his retirement for early 2008. Is the CFU correct in speculating that greater opportunities to obtain higher compensations, or even a return of land rights, will exist in the post-Mugabe era, when Zimbabwe will be forced to improve international relations?
Zimbabwe: Farm Invaders Lose Protection
Zimbabwe Offers Farm Compensation
Zimbabwe Says White Farmers May Seek Compensation
Zimbabwe Union Cautious About Government's Latest Compensation Offer
Zimbabwe has offered compensation to over 1,000 white farmers for property seized during the country’s controversial land reform program. Seven years ago, Zimbabwe’s President Robert Mugabe launched a controversial land reform program and took control of land owned by white farmers with the aim of redressing economic imbalances left over from the country’s British colonial rule.
Although it is estimated that 500 white farmers still remain in Zimbabwe, many have fled to neighboring countries including Zambia and Mozambique. The invitation for compensation was announced in the government-run Herald newspaper this past Thursday. The move, the first large-scale offer by the government to settle outstanding land debts, came days after Mugabe handed the first batch of 99-year land leases to beneficiaries of the reforms and warned white former farm owners not to expect compensation from the government.
The spokeswoman of the Commercial Farmers Union (CFU) in Harare, Emily Crookes, says the Union is suspicious of the latest compensation offer. She says the Zimbabwean government previously has offered less than 10 percent of the market value of buildings and equipment and no compensation at all for the land itself.
"It's not the first time that such lists have appeared and I think, really, theCritics have blamed Zimbabwe’s current economic crisis on a combination of mismanagement and government corruption. Specifically, they argue that the government seizure of land owned by white farmers triggered a sharp drop in production and exports of agricultural goods, and caused a fall-out with international investors.
proof will be in the pudding as to what level of compensation they will offer to
all these farmers," she said.
President Robert Mugabe denies claims that his government policies, including land reforms, have contributed to the country's problems. Instead he blames domestic and foreign enemies for the country's difficulties and accuses its former colonial power Britain of leading a Western campaign of economic sabotage.
Question: President Mugabe has announced his retirement for early 2008. Is the CFU correct in speculating that greater opportunities to obtain higher compensations, or even a return of land rights, will exist in the post-Mugabe era, when Zimbabwe will be forced to improve international relations?
Saturday, November 18, 2006
EU Opens Door for Cross-Border Service Providers
Source: EU agrees [sic] law liberalising cross-border service provision - FT.com
As a concession to socialist objections to this legislation, several categories of professional service industries were excluded, including health and financial services: By contrast, accountants, consultants, caterers, and plumbers all fall within the protections of the new law. The Eurpoean parliament gives member states until the end of 2010 to implement the new directive.
Questions
Does this type of liberalization make sense? On the one hand, it reduces cross-border barriers that impede the provision of services. On the other hand, consider the potential enforcement nightmares and competitive advantages that will exist is service providers in the same city are bound by different rules. Will this lead, as critics fear, to “a race to the lowest standards?”
Russia-US bilateral WTO deal
Source: US and Russia sign bilateral WTO deal - CNN
Russia’s 13-year-old bid to join the World Trade Organization ended for them successfully on Sunday as the former superpower and the US signed a deal removing the last major obstacle needed in order for Russia to join; the agreement took place at the Asia-Pacific Economic Cooperation summit in Hanoi.
Russia’s economy minister, German Gref, cited the deal as a “very substantial milestone in the full integration of Russia into the global economy.” Russia was the last major economy outside the WTO and stands to significantly benefit after joining; in particular, obstacles are removed for Russia’s access to U.S. beef, pork and poultry markets. Additionally, Russia has agreed to help combat piracy and counterfeiting of foreign goods.
The deal’s making, the 57th of a string of similar agreements signed by Russia in the past six years, is attributed to the positive contact between Presidents Bush and Putin. The process is not finished, however, until multilateral talks are concluded, and that’s expected to happen mid-way through 2007.
Analysts expect normal trade relations with Russia to encourage US companies to invest and do business with the country.
Question:
- With new channels of import and export business, will corruption in Russia decrease as a result, or will corruption have to decrease before such business is to effectively begin?
Russia’s 13-year-old bid to join the World Trade Organization ended for them successfully on Sunday as the former superpower and the US signed a deal removing the last major obstacle needed in order for Russia to join; the agreement took place at the Asia-Pacific Economic Cooperation summit in Hanoi.
Russia’s economy minister, German Gref, cited the deal as a “very substantial milestone in the full integration of Russia into the global economy.” Russia was the last major economy outside the WTO and stands to significantly benefit after joining; in particular, obstacles are removed for Russia’s access to U.S. beef, pork and poultry markets. Additionally, Russia has agreed to help combat piracy and counterfeiting of foreign goods.
The deal’s making, the 57th of a string of similar agreements signed by Russia in the past six years, is attributed to the positive contact between Presidents Bush and Putin. The process is not finished, however, until multilateral talks are concluded, and that’s expected to happen mid-way through 2007.
Analysts expect normal trade relations with Russia to encourage US companies to invest and do business with the country.
Question:
- With new channels of import and export business, will corruption in Russia decrease as a result, or will corruption have to decrease before such business is to effectively begin?
Wednesday, November 15, 2006
Canadian Pension Fund Urged to Use Investments to Influence Corporate Ethics
Source: Ottawa Citizen
A recent decision by directors of the Canadian Pension Plan (CPP) to reject “scores” of shareholder proposals for ethical investment highlights the tension between maximizing investor dollars and urging multinational corporations (MNCs) to take steps to ensure that their operations meet external environmental, social justice, and economic sustainability standards (such as the United Nations’ Millennium Development Goals and Principles for Responsible Investment). This decision has ignited the ire of non-governmental organizations (NGOs) like the Sierra Club, Amnesty International, and Friends of the Earth.
CPP is a pension fund managed by the Canadian government. More than 16 million Canadians have made contributions to the fund and it is now a “global player” in the world investment market, and is worth over $100 billon. It had conceded that it should use its prowess to promote corporate responsibility and had committed to engaging in ethical investment last year.
The CPP board of directors justified its decision to reject the proposals because they “duplicated existing information, were too costly, too broad in scope or…not useful to shareholders.” CPP responded to criticisms by noting that improvements could be made in the board’s proxy voting process.
While the fund did support some shareholder-backed proposals for ethical investment, they rejected 80% of the environmental and social justice proposals offered.
1. How effective do you think investment funds like CPP can be in influencing corporate behavior?
A recent decision by directors of the Canadian Pension Plan (CPP) to reject “scores” of shareholder proposals for ethical investment highlights the tension between maximizing investor dollars and urging multinational corporations (MNCs) to take steps to ensure that their operations meet external environmental, social justice, and economic sustainability standards (such as the United Nations’ Millennium Development Goals and Principles for Responsible Investment). This decision has ignited the ire of non-governmental organizations (NGOs) like the Sierra Club, Amnesty International, and Friends of the Earth.
CPP is a pension fund managed by the Canadian government. More than 16 million Canadians have made contributions to the fund and it is now a “global player” in the world investment market, and is worth over $100 billon. It had conceded that it should use its prowess to promote corporate responsibility and had committed to engaging in ethical investment last year.
The CPP board of directors justified its decision to reject the proposals because they “duplicated existing information, were too costly, too broad in scope or…not useful to shareholders.” CPP responded to criticisms by noting that improvements could be made in the board’s proxy voting process.
While the fund did support some shareholder-backed proposals for ethical investment, they rejected 80% of the environmental and social justice proposals offered.
1. How effective do you think investment funds like CPP can be in influencing corporate behavior?
Sunday, November 12, 2006
World Bank Looks to Africa and Predicts Future Economic Growth
Sources: World Bank Highlights African Challenges
World Bank to Support Uganda in Investment Reforms
The World Bank identified four factors on which sub-Saharan Africa should focus in order to achieve economic growth: (1) infrastructure investment; (2) improving the investment climate; (3) harnessing skills for innovation; and (4) building institutional capacity. Focusing on these four areas will “help the region and Africa as a whole make up for missing two decades of global growth and to replicate the growth models that have lifted millions of people out of poverty.”
Gobind, Nankani, World Bank’s vice-president for the African region, projects that Africa is “on the cusp of breaking out of the long economic stagnation of the 1970s and 1980s.” World Bank’s recent report on Africa projects “the continent is capable of regaining the pace of robust growth it experienced between 1960 and 1973.” In order to reach this goal of economic growth, Africa must create the right conditions to benefit from help offered throughout the global economic community. The continent can do this by lowering indirect costs that impede upon exports and investing in skills and support innovation to spur productivity and competitiveness. Benno Ndulu, adviser to Nankani, emphasized that Africa must focus on good governance and bureaucratic efficiency, innovation and technological progress in raising productivity and competitiveness, as well as infrastructure, especially in transportation and energy.
In related news, the World Bank has pledged to support Uganda in its efforts to improve its investment climate and reduce the cost of doing business in the African country. World Bank managing director Juan Jos Daboub and Ugandan President Yoweri Museveni met and discussed the country’s strategy for addressing the its power crisis and energy supply. World Bank shares the government’s view that increasing power generation is the priority and is helping finance the dam in Bujagali designed to produce 200 MW of power.
Questions:
1. Of the four factors the World Bank reports will foster economic growth in Africa, which is the most urgent factor on which the continent should focus.
2. Uganda is focusing on the first factor—infrastructure investment—in order to generate power throughout its country. What other factor must be the priority of the nation if it is to enjoy economic growth?
World Bank to Support Uganda in Investment Reforms
The World Bank identified four factors on which sub-Saharan Africa should focus in order to achieve economic growth: (1) infrastructure investment; (2) improving the investment climate; (3) harnessing skills for innovation; and (4) building institutional capacity. Focusing on these four areas will “help the region and Africa as a whole make up for missing two decades of global growth and to replicate the growth models that have lifted millions of people out of poverty.”
Gobind, Nankani, World Bank’s vice-president for the African region, projects that Africa is “on the cusp of breaking out of the long economic stagnation of the 1970s and 1980s.” World Bank’s recent report on Africa projects “the continent is capable of regaining the pace of robust growth it experienced between 1960 and 1973.” In order to reach this goal of economic growth, Africa must create the right conditions to benefit from help offered throughout the global economic community. The continent can do this by lowering indirect costs that impede upon exports and investing in skills and support innovation to spur productivity and competitiveness. Benno Ndulu, adviser to Nankani, emphasized that Africa must focus on good governance and bureaucratic efficiency, innovation and technological progress in raising productivity and competitiveness, as well as infrastructure, especially in transportation and energy.
In related news, the World Bank has pledged to support Uganda in its efforts to improve its investment climate and reduce the cost of doing business in the African country. World Bank managing director Juan Jos Daboub and Ugandan President Yoweri Museveni met and discussed the country’s strategy for addressing the its power crisis and energy supply. World Bank shares the government’s view that increasing power generation is the priority and is helping finance the dam in Bujagali designed to produce 200 MW of power.
Questions:
1. Of the four factors the World Bank reports will foster economic growth in Africa, which is the most urgent factor on which the continent should focus.
2. Uganda is focusing on the first factor—infrastructure investment—in order to generate power throughout its country. What other factor must be the priority of the nation if it is to enjoy economic growth?
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