Economic and Social Development
Articles: African industrial hubs and industrialization: diversity, unevenness and strategic approach
Economic agglomeration and industrial clusters have always been part of industrialization and economic development. Since the 1960s industrial hubs have proliferated in Asia driven by policies to foster economic catch-up and structural transformation. Industrial hubs are relatively new to Africa but continue to attract attention from policymakers and researchers. However empirical studies on African industrial hubs have been inadequate and to date have had only a limited influence on policymaking. Contrary to accepted wisdom underperforming African industrial hubs offer an opportunity for policy learning from successes and failures. This paper aims to fill the existing knowledge gap from a policymaking perspective. It has three objectives: first to demonstrate the diversity the uneven and mixed outcomes and the evolving nature of African industrial hubs; second to provide insights and policymaking lessons through a comparative analysis of four diverse cases namely those of Mauritius the China-Africa economic and trade cooperation development zones the Tanger Med Complex in Morocco and the recent experiment with industrial hubs in Ethiopia; third to show that developing synergies to advance industrialization requires a strategic approach integrating the state’s productive role and executive excellence within the broader industrial policy framework.
Book Review: The Contest for Value in Global Value Chains: Correcting for Distorted Distribution in the Global Apparel Industry
The book is part of the series “New Horizons on International Business” launched by Edward Elgar Publishing. The title is simple clear and attractive and goes right to the heart of the issue discussed in the book — an exploration of the struggle for appropriation of value that is created in the global value chain (GVC). The book is based on a study of Bangladesh’s apparel industry and it offers a detailed analysis of the complex complementary and competing relations between various participants in the GVC — workers suppliers and global buyers as well as consumers — and how their respective power relations determine the value captured at every level of the industry GVC. In doing so the book touches upon some key issues regarding organization of GVCs the role of the state and differences between different types of GVCs. It explores interdependencies between the multiple participants in a single GVC leading to cross-influences among different contests that shape outcomes. It goes on to propose an alternative model for fair distribution of value based on interdependent relationships that interact with culture institutions and political systems to shape and advance social welfare in GVCs — or in other words “correct” for distorted distribution as the subtitle of the book notes.
The threshold effects of global economic uncertainty on foreign direct investment
This paper investigates the role of global economic uncertainty in Dunning’s investment development path (IDP) framework. By applying the dynamic panel threshold model to data from 76 developed and developing countries we find that countries’ net outward investment (NOI) follows a non-linear pattern even after incorporating global economic uncertainty into the analysis. At the same time global economic uncertainty has non-linear effects on NOI subject to the level of economic development. More importantly our results show that NOI is path dependent with correlation coefficients changing across the different stages of IDP which implies that uncertainty affects countries’ progression to the next stage of IDP differently. From a policy perspective our findings call for special attention to policymakers in less developed nations. Even though global economic uncertainty may not always have a negative effect or may even improve a country’s NOI for a while it may deter the international expansion of local firms. In the presence of high global economic uncertainty local firms are less likely to become outward foreign direct investors which implies stagnation in internationalization.
GVC spillovers on total factor productivity of local firms: evidence from the Russian Federation
Global value chains (GVCs) generate significant effects on participating firms. But can GVCs affect other companies in the host economies? We propose a conceptual framework for GVC spillovers and test it using data for Russian manufacturing firms in 2009–2015. Using a panel estimation technique with random and fixed effects we find that firms in industries that are intensively integrated into GVCs on average have higher total factor productivity (TFP) controlling for firm heterogeneity industry and region fixed effects. TFP gains in GVCs are unequally distributed and depend on (i) the industry’s position in the GVC (ii) the industry’s technological intensity and (iii) the firm’s TFP level. We relate the findings to the evidence of the “optimal” technological gap that maximizes productivity spillovers for national companies. The results are highly relevant for policymakers as they prove that trade policy and foreign direct investment attraction policy should not go hand in hand but should be incorporated into GVC-oriented policy to encourage the full range of TFP improvements in local (non-GVC-included) firms. To fully benefit from GVC-oriented policy State policy should encourage the development of inter-firm links. In addition our results support the importance of evolutionary structural changes in economic upgrading in GVCs and the strength of the role of policies oriented towards medium-technology industries as drivers of technological development.
UNCTAD Insights: The evolution of digital MNEs: an empirical note
UNCTAD first published a list of the top 100 digital multinationals in the World Investment Report 2017. This research note builds on the analysis and conceptual framework on digitalization and foreign direct investment set out in that report. It provides an updated list allowing for an analysis of trends over the five-year period including the COVID-19 pandemic and adds new features to the data set that will be exploited in forthcoming UNCTAD work. The note describes the methodology to create the new and extended data set and points at possible avenues for further work. The purpose of the research note is to provide academic scholars with the basic elements needed to pursue further research in this field.
From few to many: main trends in the internationalization of business R&D
The paper studies the internationalization of business research and development (R&D) from 2003 up to 2017. It highlights three major results: first R&D expenditure by foreign-owned firms has been growing but more slowly than R&D expenditure of domestically owned firms. This is mainly due to the fast growth of business R&D in China where foreign-owned firms have only a small share of overall business R&D. Second R&D internationalization has become more network-like and diverse in terms of industries and countries and less dominated by single relationships between large nations. The rise of emerging economies as host and home countries is just one of several major shifts. Service industries have gained importance as well but often remain invisible because only a few countries collect data on R&D internationalization in services. The internationalization of R&D has yielded considerable benefits for home and host countries in the form of higher aggregate R&D expenditure and spillovers. Political de-globalization weakening international institutions and a focus on “national interest” in science and technology may threaten these benefits in the future. A continuation of the policy of nondiscrimination of foreign-owned firms and more not less international cooperation is necessary.
Major features of Ethiopia’s new investment law: an appraisal of their policy implications
This paper analyses the major features of the 2020 Ethiopian investment law and their policy implications. The law has liberalized many areas of the Ethiopian economy to pave the way for increasing the private sector’s share and diminishing the Government’s role. It adopted the negative list approach to liberalization to simplify the process of determining investment fields that are open for foreign investors. It laid out procedures for handling investors’ grievances and for resolving investor–State disputes principally through domestic institutions. It also obliges investors to discharge their corporate social responsibilities. The paper argues that these features of the law demand transparent efficient and competent government institutions to properly regulate and protect investments and to attain sustainable development as the ultimate goal of the law. For this purpose it also argues that two factors are essential: ensuring effective institutional coordination and supplementing the mandatory corporate social responsibility requirements with voluntary engagement. In addition it contends that the Government needs to strengthen linkages between foreign and domestic investment promote decent jobs and sustainability enhance human resources and infrastructure and build a stable political system to reap the significant development benefits of investment as envisaged in the investment law. The paper also suggests that other countries in Africa and beyond can benefit from applying these lessons in designing or reforming their investment policies to maximize the sustainable development gains from foreign investment.
Indice global de pauvreté multidimensionnelle 2021
L'Indice mondial de pauvreté multidimensionnelle (IPM) produit par le Programme des Nations Unies pour le développement (PNUD) et l'Initiative d'Oxford concernant la pauvreté et le développement humain mesure la pauvreté en tenant compte de diverses privations subies par les personnes au cours de leur vie quotidienne notamment leur mauvaise santé une éducation insuffisante et leur faible niveau de vie. Le rapport examine le niveau et la composition de la pauvreté multidimensionnelle dans 109 pays couvrant 59 milliards de personnes et présente une ventilation par ethnie/race/caste concernant 41 pays disposant d'informations.
Índice de pobreza multidimensional global 2021
El Índice de Pobreza Multidimensional (IPM) global elaborado por el Programa de las Naciones Unidas para el Desarrollo (PNUD) y la Iniciativa de Pobreza y Desarrollo Humano de Oxford mide la pobreza considerando varias privaciones experimentadas por las personas en su vida diaria incluida la mala salud la educación insuficiente y un bajo nivel de vivir. Este informe examina el nivel y la composición de la pobreza multidimensional en 109 países que cubren a 5900 millones de personas y presenta un desglose por etnia/raza/casta para 41 países con información disponible.
Policy Approaches to Direct Digital Frontier Technologies Towards Inclusive and Sustainable Development
During the COVID-19 pandemic digital frontier technologies such as artificial intelligence and big data analytics amongst others have been mobilized to fight against the pandemic. But it is also important that digital technologies serve the needs of the Sustainable Development Goals. This report reviews the status of digital frontier technologies in the Asia-Pacific region. It stresses that the policy framework for the next generation of technology and innovation should focus on creating an enabling environment for digital frontier technologies to positively impact economy society and environment; and to reduce inequalities.
Digital economy integration in Asia and the Pacific: Insights from DigiSRII 1.0
This paper presents the results from using the Digital and Sustainable Regional Integration Index version 1 (DigiSRII 1.0) framework of ESCAP (2020b) to uncover digital economy integration trends across the Asia-Pacific region. The results show that Asia and the Pacific has made good progress with regard to conventional digital economy integration especially because of the significant improvements in the digital economy infrastructure and liberalization of trade of information and communications technology (ICT) goods. However capacity-building of the workforce and investment in infrastructure are required to bridge the digitalization gaps among the digitalized economies in the region. Moreover the fairly low regulatory uniformity among regional economies further highlights the importance of regional regulatory harmonization in order to foster regional trade in digitally enabled goods and services. From a sustainable development perspective inclusivity and equity of access to digitalization and required infrastructure remain key challenges. While Internet penetration in the region has been rising female participation in the digital economy has remained relatively low in general and extremely low in lowincome economies. In addition there is room to enhance cybersecurity in most Asia-Pacific economies. Regional digital policies should focus on harmonizing data protection protocols and building a safer network of servers that would promote economic activity and enable sensitive matters to be conducted online. Fostering a more inclusive digital transformation may considerably boost network-effects and accelerate the transition to a competitive and sustainable regional digital economy.
Estimating the effects of Internet exchange points on fixed-broadband speed and latency
The present paper provides estimates of the relationship between the number of Internet exchange points (IXPs) and fixed-broadband speed and latency in 74 countries from 2016 to 2019 using a balanced panel data set developed by the Economist Intelligence Unit for its “Inclusive Internet Index”. While in several studies a positive role of IXPs on Internet speed and latency is established a majority of the earlier ones are technical studies examining the traffic routes in specific networks. This paper contributes to this literature by triangulating earlier findings using an econometric model. The recent availability of the panel data set on IXPs speed and latency by the Economist Intelligence Unit has made this exercise possible.
Addressing sovereign debt challenges in the era of COVID-19 and beyond: The role of the United Nations
Traditionally sovereign debt problems of developing countries have been discussed mostly at institutions representing the creditors such as the Paris Club and at the International Monetary Fund but they have also been addressed by the United Nations mostly in the context of its international conferences on financing for development. Although the views of the United Nations on debt are not widely known they are highly relevant in the post-COVID-19 context as inflationary pressures could lead to tightened global financial conditions and exacerbate debt vulnerabilities in developing countries. The present paper provides an overview of sovereign debt restructurings from the 1980s a summary of the debt situation of Asia and the Pacific as a case study and a review of the views of United Nations on debt issues. It also offers suggestions to improve the global debt architecture based on such views by highlighting the importance of linking debt sustainability with sustainable development in debt restructuring workouts and through a hub-and-spoke institutional arrangement to disseminate prudential debt management practices and promote transparency.
Household consumption expenditure in Thailand during the first COVID-19 lockdown
The COVID-19 pandemic has been particularly challenging to developing countries such as Thailand. Although the country has managed to control the outbreak relatively well changes in the consumer spending behaviour could affect the whole economy. In this study household consumption expenditure in Thailand during the first COVID-19 lockdown is examined by using descriptive and empirical analyses. The findings of this study indicate that total consumption declined drastically during the first two quarters of 2020. Consumer spending on services dropped significantly during that time but spending on non-durable goods durable goods and housing-related expenses increased. These expenditure patterns are similar to those in developed countries in which consumers increased their spending on at-home activities but reduced their expenditures outside the home.
Securing green development: Can Asia-Pacific central banks and financial supervisory authorities do more?
The present paper contains a discussion on how central banks and financial supervisory authorities can foster green development in Asia and the Pacific. It is based on the argument that while fiscal policy has received much attention central banks and financial supervisory authorities can certainly play a complementary role in accelerating the transition towards low-carbon climate-resilient economies. Indeed these institutions are obliged to act as inaction could compromise their mandate to maintain economic and price stability given that climate change poses an emerging risk to the financial system. The first point made in the paper is that approximately half of the Asia-Pacific central banks either have sustainability-oriented mandates or have begun to integrate climate issues into their policy conduct. The following discussion points out that while the region remains at the early stage of implementing green monetary and financial policies some central banks and financial supervisory authorities are at the forefront in deploying monetary policy tools prudential measures and broader initiatives to support green finance. To further promote green central banking having clear guiding principles effective communication and adequate technical capacity to customize the green approach is critical. Moving forward these institutions should be mindful of possible unintended adverse impacts of sustainable central banking such as interfering with market neutrality supporting green washing and crowding out green private investments.
Global Multidimensional Poverty Index 2021
The global Multidimensional Poverty Index (MPI) produced by the United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative measures poverty by considering various deprivations experienced by people in their daily lives including poor health insufficient education and a low standard of living. This report examines the level and composition of multidimensional poverty across 109 countries covering 5.9 billion people and presents an ethnicity/race/caste disaggregation for 41 countries with available information.
Policy priorities
While there are question marks over the scale and pace of the digital frontier technological transition it would be prudent for governments to be prepared and to put effective policies in place. As stated by the Nobel laureate Robert Shiller “[w]e cannot wait until there are massive dislocations in our society to prepare for the Fourth Industrial Revolution” (Hutt 2016).
Executive summary
During the COVID-19 pandemic digital frontier technologies such as artificial intelligence (AI) and big data analytics amongst others were mobilized to fight against the pandemic. To build back better from the pandemic and meet the ambitions of the 2030 Agenda for Sustainable Development it is imperative to ensure that these technologies are also directed towards inclusive and sustainable development objectives.
Introduction
There is no universally agreed definition of what comprises frontier technology. However a recurring common feature across the different technological advances is that they all “have the potential to disrupt the status quo alter the way people live and work rearrange value pools and lead to entirely new products and services” (Manyika and others 2013).