Search

The objective of this study was to assess the economy wide indirect benefits of investments in the East West highway (EWH). This study has used a computable general equilibrium (CGE) model, which simulates indirect benefits associated with the completion of the upgraded road corridor. The transmission channel modeled is the reduction in transportation costs - reduction in vehicle operating costs, and time savings - resulting from the investments in the EWH. A CGE model is a simultaneous equation system that consists of equations representing various economic relationships for different economic agents, such as producers and households. CGE models are commonly used by countries and international financial institutions to simulate policy interventions to determine economy-wide impacts. This study involved modifying the existing social accounting matrix (SAM) and CGE model in order to carry out simulations to answer the question of economy wide impacts of the EWH investments, including impacts on real gross domestic product (GDP) growth, jobs, and trade, as well as impacts on households disaggregated by income. It aims to answer the following questions: how will the EWH lower the transportation costs for producers of goods and services?; what are the economy wide impacts of the EWH on employment, real GDP growth, trade, and household income?; and can the EWH help bridge the existing economic divide between rural and urban areas in Georgia? The study is aims to simulate quantitatively how the EWH as a large-scale infrastructure investment program can bring significant stimulus to foster economic growth and welfare in Georgia.

Effective January 1, 2015, Indonesia’s new government took the decisive step of implementing a new fuel pricing system, dramatically reducing gasoline and diesel subsidy costs. This paved the way for the government’s first budget, passed in February, to shift spending towards development priorities, especially infrastructure, the allocation for which is double the 2014 outturn. Successful implementation of the bold vision of the budget, however, will require overcoming administrative constraints to spending and dramatically lifting revenue collection performance. Achieving this, and having the benefits flow through into faster economic growth and poverty reduction, is likely to take time, especially with the pace of sustainable economic growth having slowed, due partly to lower commodity prices. Beyond the fiscal sector, reforms taken in the first months of the government’s term in key areas such as investment licensing also face complex challenges to make operational. The government has signaled its strong reform intentions, and raised expectations. Early progress will now need to be consolidated by effectively implementing major reforms and the budget posture, against a still-challenging global economic backdrop for Indonesia.

Peru’s recent robust growth has raised its economic prospects and has been broadly shared. The next step in development - high-income status - is challenging for all middle income countries and requires sustained growth. Raising productivity growth is key to sustaining Peru’s high growth rates of income per capita, including in the context of a less favorable external environment. This report looks at Peru’s principal challenges and opportunities to maintain strong and inclusive growth through higher productivity. It will require a reduction of inefficiencies by reaping more benefits from international trade and an improved innovation framework. The report has five parts. Part one analyzes the sources of Peru’s recent strong growth. Part two examines more closely the dynamics and challenges to Peruvian firms’ productivity growth. Part three analyzes elements that will increase the efficiency of Peru’s labor and capital resources - regulation, labor markets, and human capital. Part four is focused on further opportunities to reduce misallocation while at the same time speeding up within-firm productivity through expanding Peru’s technological possibilities, particularly through innovation and the spillovers from international trade. Part five concludes.

International aid flows are equivalent to almost half of Solomon Islands' economy, making it one of the most aid-dependent countries in the world. Around US$250 million of non-military aid enters the country, but only 15-20 percent of this amount is spent locally through local procurement or staff expenditure. Solomon Islands are currently highly reliant on logging for export receipts, Government revenues, and employment. But existing stocks of natural forest logs are expected to be entirely exhausted by 2014. The Solomon Islands Government approached the World Bank Group to identify alternative sources of revenue, foreign exchange receipts, and employment in the absence of logging. In responding to this request, the World Bank Group has undertaken extensive analytical work examining short and medium-term prospects for economic growth in Solomon Islands, under the sources of growth project. This report contributes to the sources of growth work, and is informed by its findings. A key conclusion arising from sources of growth analysis is that aid is likely to remain a key part of the Solomon Islands economy for the near future. The existence of an international security guarantee, backed by the presence of an international peacekeeping force, is paramount for security, and investment certainty. In the absence of clear or certain alternatives to logging, and in the context of rapid population growth, current levels of service delivery will continue to depend on high levels of aid expenditure.