Tag Archives: economic reform

Trade Capacity Building and Private Sector Engagement

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By Kirby Bryan

For sustainable economic growth, developing countries must have the capacity to functionally interact with the global market. Much of the onus for building that capacity rests on a domestic commitment to reforms compatible with global trade. Many emerging markets have lofty aspirations that are unachievable given the current state of affairs, but are determined to rectify the situation. Access to foreign markets can cement reform efforts aimed at improving the local economy and sustaining economic growth.

In late February, the Center for Strategic International Studies (CSIS) released a report from their Congressional Task Force on Trade Capacity Building (TCB) on “Opportunities in Strengthening Trade Assistance.” While the report focuses primarily on US efforts to improve the effectiveness and relevance of its TCB programs, it signals a shift in international engagement and understanding of the role trade plays on the growth of a developing economy.

The shift is also indicative of a growing global development trend toward incorporating the voice of the recipient country from the beginning stages of negotiations through agreement ratification. What is interesting about the current TCB discussions is the recognition by major players in the development world of including the knowledge and expertise of the private sector. Ultimately, it is the private sector in the developing and developed countries that will bear the fruits of economic growth and trade.

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Building a Network of Change-Makers in South Asia

South Asia regional economic network members

In late January, CIPE held its sixth in a series of capacity building and networking workshops in Colombo for its South Asia regional network of women’s business associations, which includes organizations from Pakistan, Bangladesh, Nepal, Sri Lanka and India. When CIPE began to work with this group of women business leaders two years ago, the sessions focused primarily on issues such as board governance, strategic planning, staff and financial management, membership development, and services for members.

But between training modules, discussion often turned to the challenges facing women entrepreneurs in their countries, including policy barriers that tend to create a business environment unfriendly to women. Thus, CIPE always knew that eventually, the focus of the program must turn to advocacy for policy reform.

As a result, CIPE increasingly began to raise issues of policy – and policy advocacy – in the context of the training sessions. Then, last summer, CIPE awarded four women’s associations in three countries small grants by CIPE to carry out pilot, four-month advocacy projects.

One point that had frequently arisen in the training program was a lack of understanding of the complexities of policy advocacy, such as: identifying issues of concern to members; developing concrete policy proposals and specific recommendations to tackle those issues; the hard work involved in reaching out to policymakers; the need to broadly engage the media, association members, and the general public; and the need to track results and assess the impact of advocacy initiatives.

Moreover, the countries where the advocacy initiatives took place – Pakistan, Sri Lanka, and Nepal – are challenging environments. During the four months that these organizations were implementing their small grants, each country faced political turbulence that may have shaken the resolve of less dedicated change-makers.

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Holding Pakistan’s Government Accountable on Tax Reform

Pakistan collects far less tax (as a percentage of GDP) than most countries. (Chart: Dawn)

Pakistan collects far less tax (as a percentage of GDP) than most countries. So far the PML(N) government has not been able to significantly increase the tax ratio. (Chart: Dawn)

The Pakistan Muslim League (Nawaz) (PML (N)) government is completing its second year in power on May 11, 2015. It is astonishing to observe that the accountability process for democratically elected government has improved significantly.

Under a CIPE grant, the first such public accountability process was initiated by Policy Research Institute for Market Economy (PRIME), an independent think tank based in Islamabad. PRIME started a simple exercise by taking concrete promises from PMLN’s economic platform and, through a scientifically designed scoring process, monitoring the government’s performance under three key sections: Economic Revival, Energy Security, and Social Protection. These sections were further divided into 82 sub-categories.

The report is widely accepted as an unbiased measure of the government’s performance. The report received significant coverage in local media, both print and television. PRIME Executive Director Ali Salman suggests that “IMF Staff Mission assessment of Pakistan’s economic situation and reforms have many agreements with PRIME’s Tracking Report.”

The accountability process has recently moved to the next level, as the government’s Standing Committee on Finance publically accused the PML (N) government of making decisions on taxation measures in isolation, without taking the Standing Committee in confidence.

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An Unsustainable Future for Algerian Fuel Subsidies?

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Photo: Wikimedia Commons

 

precipitous fall in oil prices in the last seven months has led many oil-producing nations to reconsider their incredibly costly fuel subsidies, which drain government budgets and distort the economy. Yet Algeria, which relies on oil for most  of its government revenue, has taken a different path: freezing public-sector hiring and investment while keeping its subsidies in place – a decision which may only increase its dependence on oil exports in the future.

On Christmas Eve of 2014, Algerian Prime Minister Abdelmalek Sellal announced that, in response to the drop in oil revenue and impending economic crisis, the administration would freeze public sector hiring and new state investment projects. However, the Prime Minister and other officials have insisted that, for the moment, fuel subsidies will remain in place, keeping domestic fuel prices at some of the lowest levels on the African continent – 25 cents per liter, or about 95 cents per gallon.

“The administration is making decisions based on the outlook of the global oil market and on Algeria’s middle- and long-term capacity to support an economy fueled by hydrocarbons,” said Slim Othmani, President of CIPE partner Cercle d’Action et de Réflexion autour de l’Entreprise (CARE), in a recent interview.

In other words, this approach will only deepen the country’s dependence on oil and gas revenues. Not only is this a gamble, it also misses an ideal political moment to recalibrate the fuel subsidies. The government could use the pressure of outside economic forces to make the argument for internal change, and the natural consequences of dropping oil prices could bring home the reasons for reform. Plus, cutting subsidies when fuel is cheap will make the process less painful to consumers.

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Can Ukraine Stamp Out its Corruption Culture?

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Ukraine’s “Euromaidan” protests were driven by activists fed up with corruption. Can the new government turn things around?

When it comes to opportunity for anti-corruption reform on a massive scale, few countries have ever been as ripe for change as Ukraine today. Western countries and the International Monetary Fund are pushing hard for transparency and clean government. They enjoy unprecedented leverage over Ukraine’s political and economic elites, who need billions in loans to stave off economic ruin. Ukraine’s populace, which took to the streets a year ago to oust a president reviled for his flamboyant corruption, is maddened at the lack of a single, high-profile corruption prosecution since then. Investors, once attracted to Ukraine by a highly educated workforce, cheap industrial assets, and some of the world’s most fertile farmland, have made it clear that corruption is a deal breaker.

Freshly elected Ukrainian leaders committed to reform and European integration are taking seemingly drastic steps on the anti-corruption front. In October, they passed an impressive package of laws that provide the framework to investigate, prosecute and imprison wrongdoers. Just as important, the new laws require the training and monitoring of the tens of thousands of public servants – from traffic cops to school principals to MPs – who collectively represent the “demand side” of Ukraine’s corruption equation.

To implement these new laws and flesh out the details, Ukraine’s elected leaders are turning to technocrats from countries counted as anti-corruption success stories – mostly Georgia and Lithuania. They are laboring away this winter in various ministries and in the Presidential Administration, trying to figure out how to train and empower the men and women who, in the face of a decades-old corruption culture and vastly outnumbered by colleagues benefiting from the status quo, will be the shock troops of anti-corruption reform. Taken together, these are impressive, ambitious moves in a country of 45 million, by far the largest state in the post-Soviet space to attempt such a housecleaning.

All this was on display last week during a fact-finding mission by CIPE’s lead anti-corruption expert in Ukraine, Drago Kos, who also serves as the chairman of the Working Group on Bribery of the Organisation of Economic Cooperation and Development. Kos, a plainspoken man who began his career in the Slovenian police force, spent a week in Kyiv, building rapport and sharing opinions with the Ukrainians at the forefront of the anti-corruption effort.

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Public-Private Dialogue: The Key to Good Governance and Development

An increasing number of policy and governance challenges around the world demand private sector participation to generate viable solutions. Such challenges include poverty reduction, inclusive growth, government accountability, business integrity, national competitiveness, innovation, and access to opportunity. Although the obstacles to dialogue can be high, the value of dialogue is now widely recognized by governments and business leaders alike. Notably, the 4th High Level Forum on Aid Effectiveness in Busan, Korea, recommended that countries embrace “inclusive dialogue for building a policy environment conducive to sustainable development.”

In CIPE’s latest Economic Reform Feature Service article, Benjamin Herzberg, Program Lead, Leadership, Learning and Innovation at the World Bank Group, my colleague Kim Bettcher, Senior Knowledge Manager at CIPE, and I explore the importance of PPD and discuss its practical applications around the world. 

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Democracy Has Survived in Tunisia, But What Comes Next?

 

Hiba Safi is a CIPE-Atlas Corps Think Tank LINKS Fellow at the Tahrir Institute for Middle East Policy

After decades of dictatorship, Tunisia’s revolution set in motion a series of uprisings across the Arab world, laying the foundations for a flourishing democracy. It has become the sole “flower” of the Arab Spring and is now heralded as a role model for the Middle East and North Africa region. However, behind the shiny façade, the road towards democracy has certainly not been without barriers and Tunisia still faces numerous hurdles not only in managing security but also solidifying democratic institutions.

Today, Tunisia has made enormous progress in its democratic transition – its future is determined by Tunisians themselves, able to choose their political leaders and their own path. Freedom House described Tunisia in its annual report as “the Arab world’s only free country, the sole success story of the Arab Spring and a full-fledged democracy,” while the Economist Intelligence Unit classified Tunisia as the most democratic Arab state in its last democracy index.

The “Tunisian exception,” political analysts say, resulted from a reconciliation between modern ideals and Islam, the neutral role played by army, a genuine multiparty democracy, a successful national dialogue initiative, and the massive role played by civil society pushing for an end to the Tunisian political crisis.

As a result of these and other factors, Tunisia underwent its first peaceful, democratic transfer of power in December 2014, accompanied by a newly elected parliament, the first democratic presidential elections, and a new constitution, all conducted in a free, fair, and transparent process.

This peaceful political transition is seen as a positive example to the region that should bring hope in the midst of a bloody civil war in Syria, deeply embedded divisions in Libya, and chaos in Yemen. Tunisia now stands tall as the relative success story among the recent popular revolutions in the region.

But to sustain this progress into the future, it must also get its economy on the right footing.

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