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Shopping Mall Escalators
August 19, 2016

Should Countries Be More Like Shopping Malls? A Proposal for Service Performance Guarantees

Many developing countries have made progress in political openness and economic management but still struggle to attract private sector investments. Potential investors to these countries have many concerns that can broadly be classified into high costs and high actual or perceived risks. Drawing on insights from existing guarantees offered by bilateral development agencies, national governments, utility companies, and even shopping malls, we suggest that Service Performance Guarantees can be part of the solution, offering investing firms the opportunity to purchase insurance against a wider range of risks than is currently possible and establishing a partnership of donors and recipient governments, accountable to their investor clients.

Alan Gelb , Vijaya Ramachandran , Matt Juden and Alice Rossignol
December 22, 2015

The Role of Industrial Policy as a Development Tool: New Evidence from the Globalization of Trade-and-Investment

Emerging market countries that manage to diversify and upgrade their production and export base grow more rapidly and enjoy greater welfare gains than those that do not.  Foreign direct investment in manufacturing is concentrated in middle- and upper-skilled activities -- not lowest-skilled operations -- and thus offers many opportunities for structural transformation of the host economy.  But the challenge of using FDI to diversify and upgrade the local production and export base is fraught with market failures and tricky obstacles.  Contemporary debates about industrial policy as a development tool focus on how best to overcome these market failures and other difficulties.

July 20, 2015

Bringing US Development Finance into the 21st Century

The future of development policy is in development finance. Developing countries need aid less and less as their incomes rise and economies grow. What they need now is private investment and finance. US development policy, however, has failed to bring its development finance tools in line with this reality. Related US efforts have not been deployed in an efficient or strategic manner because authorities are outdated, staff resources are insufficient, and tools are dispersed across multiple agencies.

Other players are doing more. Well-established European development finance institutions (DFIs) are providing integrated services for businesses, and these services cover debt and equity financing, risk mitigation, and technical assistance. Moreover, emerging-market actors — including China, India, Brazil, and Malaysia — have dramatically increased financing activities in developing regions such as Latin America and Sub-Saharan Africa.

Guarantees, Subsidies, or Paying for Success? Choosing the Right Instruments to Catalyze Private Investment in Developing Countries - Working Paper 402
May 5, 2015

Guarantees, Subsidies, or Paying for Success? Choosing the Right Instrument to Catalyze Private Investment in Developing Countries - Working Paper 402

Governments, donors, and public sector agencies are seeking productive ways to ‘crowd in’ private sector involvement and capital to tackle international development challenges. The financial instruments that are used to create incentives for private sector involvement are typically those that lower an investment’s risk (such as credit guarantees) or those that lower the costs of various inputs (such as concessional loans, which subsidise borrowing).

USDFC
March 17, 2015

Bringing US Development Finance into the 21st Century: Proposal for a Self-Sustaining, Full-Service USDFC

The imperative for US development finance has increased significantly due to a number of factors over the last decade. There is growing demand for private investment and finance from businesses, citizens, and governments in developing countries. Given the scale of challenges and opportunities, especially in promoting infrastructure investments and expanding productive sectors, there is an increasingly recognized need to promote private sector-based solutions. 

August 20, 2013

Moving Beyond Mines and Mobiles: How Can IFC Add Value in Fragile States?

The International Finance Corporation wants to increase its development impact in fragile states. Currently, the IFC’s fragile-state portfolio mirrors that of overall foreign direct investment stocks in such countries: focused in extractive industries and mobile telephony. That suggests potentially limited value-added from the Corporation’s investments in terms of crowding in private capital. If the IFC is trying to increase its portfolio and development impact in fragile states, it should look for sectoral opportunities that share some of the features of mines and mobile investments but currently attract limited FDI.

June 13, 2011

Globalization, Wages, and Working Conditions: A Case Study of Cambodian Garment Factories - Working Paper 257

Using a comprehensive data set of working conditions and wage compliance in Cambodia’s exporting garment factories, the authors explore the impact of foreign ownership on wages and working conditions, whether the relationship between wages and working conditions more closely resembles efficiency wage or compensating differential theory, and whether the wage-working conditions relationship differs between domestically owned and foreign-owned firms.

Cael Warren and Raymond Robertson

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