Maximising the public-private investment multiplier

By Alain de Janvry and Elisabeth Sadoulet, Professors at the University of California at Berkeley and Senior Fellows at the FERDI
 

Development-finance

At the FERDI-IDDRI conference on “Development, Climate and Security” held in Paris on January 15, 2018, Barbara Buchner from the Climate Policy Initiative reported on the state of global climate finance flows for mitigation and adaptation. She made two points. First, finance is under-invested to combat climate change if the COP21 target in temperature increase is to be met. Second, private investment’s role in complementing public investment in climate finance is large, with an estimated 2/3 private for 1/3 public in current total contributions. This stresses the fundamental part private investment can play in meeting the COP21 objectives, particularly at a time when governments face multiple demands on public expenditures.

With public investment targeted to induce private investment, this raises the issue of public investment’s effect as a private investment multiplier. A useful way of thinking about the under-investment issue is consequently how to target public investment to maximise the public-private investment multiplier.

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Enabling Asian SMEs to thrive in a digital world

By Dr. Deborah Elms, Executive Director, Asian Trade Centre, Singapore

e-commerce-digital-business-dmA young lady in a remote village in northern Vietnam is using new technology to create and sell her family’s traditional silver necklace designs to customers across the region and even globally who can collect their purchases directly from 3D printing facilities.

Another small firm in Bangkok has transformed its eyewear company to sell online using a mobile app that allows users to visualise glasses from different angles as the phone tilts. Shoppers are finding and increasingly buying these products from all across the region.

These small companies — and many more like them — show the promise of e-commerce and digital trade to transform business in Asia. The tiniest firm in the most remote location can become a “micromultinational.”

But this promise comes with a catch: such business practices work if, and only if, governments in the region are able to build a supportive and enabling policy environment. For smaller firms, complicated or difficult policies that cause delays and drive up costs can be impossible to overcome.
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Food prices must drop in Africa: How can this be achieved?

By Thomas Allen, Sahel and West Africa Club Secretariat (SWAC/OECD)

After the 2007-08 crisis, we got into the bad habit when discussing food prices of focusing almost exclusively on volatility and overlooking the question of the level of prices. Of course, reasons were good for this; between February 2007 and February 2008, world food prices jumped 60%. These increases combined with local factors had dramatic effects, particularly in West Africa, where millions of households already had insufficient income to cover their basic nutritional needs. Today, according to OECD and FAO projections, food prices are expected to remain stable in the medium-term. This is a good time to re-examine some important questions.

Are food products cheap in sub-Saharan Africa?

The question may seem surprising, as food is no doubt cheaper in the poorest countries. This is the first thing that any tourist would tell you, and it is confirmed by statistics. Sub-Saharan countries do indeed have the lowest prices in absolute terms (see figure). African food products are therefore much more affordable…for the European consumer. What about for the African consumer? Continue reading

What gets measured gets managed: Tapping into local procurement in the mining industry to advance development

By Luke Balleny, Manager, Role of Mining and Metals in Society, International Council on Mining and Metals

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Zambia – crusher for manufactured sand. Photo: Shutterstock

How do mining companies spend their money? If you didn’t know and listened only to the media, you might think such companies spend the most on taxes and royalties. However, you’d be wrong.

When minerals or metals are monetised, the revenue is shared between four main stakeholders in the following ways:

  1. 50–65% of mining revenue goes to operating and capital expenditure, such as the suppliers who are paid for their inputs.
  2. 15–20% goes to government, which receives its share through royalties and taxes.
  3. 15–20% goes to investors who receive profits, typically a residual after the other payments have been made.
  4. 10–20% goes to employees who are paid their wages.

A World Gold Council (WGC) study shows that out of the total annual spending in 2012 of USD 55 billion by the 15 WGC members studied, some USD 35 billion were payments to other businesses, mostly subcontracting and procurement. Less than USD 10 billion were royalty and tax payments to governments.

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Are we ready to prevent the next food price crisis?

By Denis Drechsler, Project Manager, Agricultural Market Information System (AMIS), Food and Agriculture Organization of the United Nations

food-crisisWhen prices of staple food crops soared in international markets in 2007-10, it was a wakeup call for many world leaders to take action. In view of millions of families being pushed into hunger, the G20 decided to create the Agricultural Market Information System (AMIS) to combat excessive volatility by enhancing transparency and policy co-ordination in international food markets.

Since its launch in 2011, AMIS has provided more reliable and timely assessments of global food supplies by working closely with the main trading countries of staple food crops. This has created a more level playing field for all market actors to make informed decisions. Even more important have been achievements in the area of policy dialogue. When maize prices spiked in 2012, for example, regular exchanges among the key producing countries helped avoid a repeat of hasty policy action, such as export bans that had exacerbated market turbulences in the past. Through AMIS, it seems, the world is better prepared to minimise the risk of future food price crises.

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Energy for the 2030 Agenda

By Dr. Fatih Birol, Executive Director, International Energy Agency

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Africa’s night sky could change dramatically if we achieve “energy for all” by 2030.

The 2030 Agenda for Sustainable Development has been ratified, and access to affordable, reliable, sustainable and modern energy for all by 2030 is a target in its own right (SDG 7). Modern energy is central to achieving global development: it has never been a more important time to understand where the world stands on achieving this target, and to propose pragmatic strategies for achieving universal energy access.1

Achieving modern energy for all is within reach. The number of people without access to electricity fell below 1.1 billion in 2016, from 1.7 billion in 2000. We have undertaken an in-depth assessment of each country’s progress, finding some staggering successes. Half a billion people gained access to electricity in India alone, with government policies putting the country on track to universal access by the early 2020s, a tremendous achievement. Moreover, some countries in sub-Saharan Africa, including Kenya and Ethiopia, are on track to universal electricity access by 2030. However, progress overall has been uneven. Despite current efforts, over 670 million people will still be without electricity by 2030, 90% in sub-Saharan Africa.

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2030 began yesterday

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By Mario Cerutti, Chief Institutional Relations & Sustainability Officer, Lavazza

To learn more about countries’ strategies for economic transformation, learn about the 9th Plenary Meeting of the OECD Initiative for Global Value Chains, Production Transformation and Development hosted by the Economic and Social Commission for Asia and the Pacific (ESCAP) in Bangkok, Thailand on November 2017.

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Image taken from the Lavazza Sustainability Report 2016

On 25 September 2015, 193 countries agreed to 17 Sustainable Development Goals (SDGs) that seek to ‘’end poverty, protect the planet and ensure that all people enjoy peace and prosperity.’’1

Making that vision a reality calls on us all, including business, to renew our commitment to sustainability. What does this mean in practical terms?

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