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This paper examines the past and future trajectory of the Russian Federation's potential growth: the speed at which an economy could grow if all resources were utilized efficiently. The findings show that it peaked before the 2008 global financial crisis and continued to decline up to 2017. The estimated potential growth rate was 3.8 percent in 2000-09 and 1.7 percent in 2010-17, a 2.1 percentage point decline. The most recent deceleration was due to a slowdown of productivity growth and a shrinking potential labor force, rather than a shortfall in capital accumulation. For its future trajectory, under the baseline scenario, Russia's potential growth is expected to continue its gradual downward trend, from 1.5 percent in 2017 to 1.3 percent in 2022. It is expected to recover gradually thereafter, primarily driven by stabilization of the labor force. The simulations of proposed reform measures currently being considered by policy makers, including a combination of pension reform, more migration, higher investment, and gradual acceleration of total factor productivity growth, can double Russia's potential growth rate to 3.0 percent by 2028. Under the assumptions discussed in the paper, pension reform, increases in migration, investment, and productivity contribute 0.4, 0.2, 0.6, and 0.3 percentage points, respectively, to the increase in Russia's potential growth rate. Potential growth is found to be most sensitive to changes in total factor productivity growth, suggesting that reforms that increase productivity may have the most impact on boosting Russia's potential growth.

As globalization has intensified, multinational enterprises'investments have become a sophisticated set of financial transactions that are difficult to monitor and classify by the home and host countries. In some cases, what is classified as foreign direct investment is rather"indirect foreign direct investment,"channeled through a third country. Indirect flows have increased significantly in recent years, now accounting for almost 30 percent of global foreign direct investment flows. Indirect foreign direct investment flows also capture the flow of domestic funds channeled through offshore centers back to the local economy in the form of direct investment, also known as"foreign direct investment round tripping."These investments do not offer the benefits of typical foreign direct investment, and may lead to tax revenue and welfare losses. Round tripping is mostly channeled through offshore financial or transshipping centers. In most cases, domestic companies round trip their investments to benefit from preferential treatments reserved for certain countries and their firms. The most important policy measure to reduce round tripping activity and mitigate its impact is to improve the business environment for all firms; this can foster domestic and foreign investment, and may, to some extent, also curb foreign direct investment round tripping. Nevertheless, countries also need to adapt to the new playing field for foreign direct investment, and recognize the trade-offs of their national policies on capital flows. National policy measures must be complemented by international actions. At the same time, all indirect foreign direct investment flows should be closely monitored, something that is best conducted in coordination with international partners.

This report assesses the future impact of two dynamically transforming economies – China and India – on Russia’s economy. China is slowing down and rebalancing its economy whereas India is rapidly expanding. What does this hold for Russia? The report begins with a snapshot of findings, followed by eight chapters. Chapter one motivates the topic and identifies analytical and empirical gaps that this report fills. Chapter two examines the current pattern of trade between Russia and the two countries, and it discusses how important – or not – China and India’s economies are for Russia. Chapter three follows by summarizing the results of three complementary approaches for measuring Russia’s trade potential with China and India (and also the rest of the world). Chapter fourth intuitively describes the customized methodology developed for this report; its major caveats and assumptions, and its possible extensions (technical details, for those interested, are in the annexes). Chapter fifth outlines four plausible scenarios of the potential impact on Russia of changes in China and India, and chapter sixth presents the results. Chapter seventh explores the sensitivity of results to changes key in assumptions. Finally, chapter eighth concludes with emerging policy implications for Russia.

This report comes at a crucial time when the unprecedented global refugee crisis, most notably in Europe and the Mediterranean, has not only focused the world’s attention on the plight of refugees, but has also led to the politicization of refugee influxes. This report, which provides an original analysis of the economic and social impact of refugees in Kenya’s Kakuma refugee camp on their Turkana hosts, therefore comes at an opportune time and can resonate with governments and policy makers beyond Kenya’s borders. In particular, the methodology the authors have developed enables to run policy scenarios in a rigorous manner, ranging from encampment to decampment (that is, camp closure) scenarios, and the potential to apply this methodology in other refugee situations around the world is particularly advantageous.

Existing work on China's economic influence in Africa refers to Africa in broad terms, thereby generalizing the results to an extent that is unhelpful for policy-makers in a specific country. Moreover, the emphasis is on oil exporters. This paper remedies this by focusing on a single, oil-importing country: Kenya. The paper examines China's economic presence in Kenya and some of the popular myths surrounding Chinese economic activity. The first myth is that Chinese companies do not employ local workers. In fact, 78 percent of full-time and 95 percent of part-time employees in Chinese companies are locals. Second, although China represents a large potential market for local exporters, the study finds that China has a better chance of expanding its exports to Kenya than Kenya does to China based on existing specializations. This may change with recent oil discoveries in Kenya, increasing the space for Kenyan exports to China, as well as from China's shift to a consumption-driven economy which will increase demand for services, a growing strength of Kenya's economy (World Bank Country Economic Memorandum 2016). The paper emphasizes that Kenyan policy makers should be less concerned about bilateral trade imbalances and worry about Kenya's overall trade balance. However, the Standard Gauge Railway and Thika superhighway experiences suggest that Chinese firms offer relatively few technology transfer or supplier opportunities for local firms and academia. Third, the popular focus of Chinese competition is on the impact on well-organized Kenyan producers and not on consumers, thereby underestimating the benefits Kenyan consumer derive from the availability of more affordable Chinese goods. The paper concludes with policy directions for improving export competitiveness and transparency in infrastructure projects, and local content.

This paper uses the night lights (satellite imagery from outer space) approach to estimate growth in and levels of subnational 2013 gross domestic product for 47 counties in Kenya and 30 districts in Rwanda. Estimating subnational gross domestic product is consequential for three reasons. First, there is strong policy interest in how growth can occur in different parts of countries, so that communities can share in national prosperity and not get left behind. Second, subnational entities want to understand how they stack up against their neighbors and competitors, and how much they contribute to national gross domestic product. Third, such information could help private investors to assess where to undertake investments. Using night lights has the advantage of seeing a new and more accurate estimation of informal activity, and being independent of official data. However, the approach may underestimate economic activity in sectors that are largely unlit notably agriculture. For Kenya, the results of the analysis affirm that Nairobi County is the largest contributor to national gross domestic product. However, at 13 percent, this contribution is lower than commonly thought. For Rwanda, the three districts of Kigali account for 40 percent of national gross domestic product, underscoring the lower scale of economic activity in the rest of the country. To get a composite picture of subnational economic activity, especially in the context of rapidly improving official statistics in Kenya and Rwanda, it is important to estimate subnational gross domestic product using standard approaches (production, expenditure, income).

Competition, unlike regulation, is a decentralized process where individual service providers, driven by the profit motive, compete with each other to provide services to consumers. And unlike competition, regulation is a centralized process that makes decisions about tariffs, quality standards, and investments. Where full-fledged competition is not possible, regulation is considered to be a surrogate.

This paper examines whether a country's stage of development affects its climate sensitivity. The paper begins with a model of agriculture that shows that the effect of development on climate sensitivity is ambiguous, depending on the substitution between capital and climate. To resolve this issue, the climate sensitivity of agriculture in the United States, Brazil, and India is measured using a Ricardian approach. Relying on both intertemporal as well as cross-country comparisons, the empirical analysis suggests that increasing development reduces climate sensitivity.

The magnitude and persistence of growth in gross domestic product are topics of intense scrutiny by economists. Although the existing techniques provide a range of tools to study the nature of growth and volatility time series, these usually come with shortcomings, including the need to arbitrarily define acceleration spells, and focus on a particular frequency at a time. This paper explores the application of "wavelet-based" techniques to study the time-varying nature of growth and volatility. These techniques lend themselves to a more robust analysis of short-term and long-term determinants of growth and volatility than the traditional decomposition techniques, as demonstrated on a small sample of countries. In addition to having desirable technical advantages, such as localization in time and frequency and the ability to work with non-stationary series, these techniques also make it possible to accurately decompose the association between growth trajectories of different countries over different time horizons. Such "co-movement" analysis can provide policy makers with important insights on regional integration, growth poles, and how short and long term developments in other countries affect their domestic economy.

In this chapter, two different types of impacts on human and ecological systems are examined: (i) impacts of extreme weather and climate events; and (ii) extreme impacts triggered by less-than-extreme weather or climate events (in combination with non-climatic factors, such as high exposure and/or vulnerability). Where data are available, impacts are examined from sectoral and regional perspectives.

How big a threat is global warming to climate-sensitive and economically important sectors such as agriculture in developing countries? How well will farmers be able to adapt to the threats of global warming? This paper attempts to shed light on these two important questions. A cross-sectional analysis is employed to estimate the climate sensitivity of agriculture in Brazil and India. Using panel data from both countries, the study measures how net farm income or property values vary with climate, and consequently, how farmers in India and Brazil react and adapt to climate. The estimated relationships are then used to predict the consequence of alternative climate scenarios. Global warming by the end of the next century could cause annual damages in Brazil between 1% and 39% and between 4% and 26% in India, although some of this effect may be potentially offset by carbon fertilization. These estimates do not factor into account climate-induced extreme weather events. (C) 2008 Elsevier Ltd. All rights reserved.