Tag: Private Investment

 

The Pitfalls of Leverage Targets

Blog Post

Since the 2015 financing for development agreement, donor governments and their development finance institutions have all been singing from the same hymn sheet: we must do more to mobilize private investment. Here I will argue that setting leverage targets in isolation might not get us what we want: more investment in developing countries. Overall investment volumes in chosen markets may make a better target, but any incentives must be soft to minimize the temptation to put public money where it is not needed.

It’s Time for a Code of Conduct on Transparency for Financiers Backing PPPs

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Public-Private Partnership models continue to proliferate, backed by multilateral development banks old and new. But the volume of PPPs in developing countries has stagnated since the global financial crisis, and they won’t deliver unless they are designed and implemented well. Making more and better public-private investments will take a far greater commitment to transparency from participants in the deals. Financiers—MDBs in particular—should take the lead.

DFIs Embark on a Voyage of Rediscovery

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Development finance institutions (DFIs) have long resisted the idea that they ought to support coordinated national development strategies in the countries that they invest in, but if conversations around private roundtables at the recent World Bank/IMF meetings are anything to go by, that’s where they may be heading. And if so, it may be the private sector itself that leads them there.

Can Manufacturing Kickstart Growth in Africa? – Podcast with Vijaya Ramachandran

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China has long been the factory of the world. But as wages there rise, manufacturers are looking to other countries and regions. Meanwhile, African countries have a huge and burgeoning population of young people looking for jobs. So now many wonder—could Africa be the next big destination for manufacturers? And if not, then what? CGD senior fellow Vijaya Ramachandran joins the podcast to discuss a new CGD paper on that very question.

The Good, the Bad, and the Ugly: How Do Tax Incentives Impact Investment?

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There are arguments for and against “spending through the tax system.” On one hand tax incentives are relatively easy to implement; they don’t require an outlay of cash and they make use of information that revenue agencies already collect. But on the other, loading the tax system with too many policy objectives conflicts with the drive for a coherent, simple, transparent tax system. Despite decades of advice from international organisations to curtail tax incentives, they remain a popular tool for governments.

Can Sub-Saharan Africa Be a Manufacturing Destination?

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A new paper coauthored by Alan Gelb, Christian Meyer, Divyanshi Wadhwa, and myself suggests that Africa is not, in general, poised to embark on a manufacturing-led take-off, stepping into the shoes of emerging Asia. Africa, including those countries that have come to be regarded as leaders in development, has high manufacturing labor costs relative to GDP as well as high capital costs relative to low-income comparators.

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Our central question is whether African countries can break into global manufacturing in a substantial way. Our results suggest that for any given level of GDP, labor is more costly for firms that are located in Sub-Saharan Africa. However, we also find that there are a few countries in Africa that, on a labor cost basis, may be potential candidates for manufacturing—Ethiopia in particular stands out.

Progress on Global Development Commitments, or More of the Same? CGD Experts Share Hopes and Predictions for 2017 G20 Summit

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Each of the G20 summits of the past seven years has suffered in comparison with the London and Pittsburgh Summits of 2009, when the imperative of crisis response motivated leaders, finance ministers, and central bankers to coordinate effectively with each other. Subsequent summits have lacked the same sense of urgency and have failed to deliver any kind of agenda that can be pinpointed as clearly as “saving the global economy.” This week’s summit in Hamburg, Germany promises more of the same, with the real possibility that the G20’s stock could fall even further at the hands of a non-cooperative US delegation.

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