Developing Countries: A Strategy for Macroeconomic Stability
March 7, 2008
With financial markets being in a state of turmoil, developing countries—often vulnerable to shocks from the outside that are beyond their control—are concerned about possible threats to their own macroeconomic stability.  Full Text
 

For Maximum Economic Growth from Trade Liberalization, Countries Should Consider Complementary Domestic Reforms
December 5, 2005
Recent World Bank research suggests that countries should complement trade openness with greater flexibility of their investment climate and labor markets, and pay more attention to other key areas such as governance and infrastructure, among others. As multilateral trade policies are debated during the Doha round of trade negotiations, it is clear that developing countries seeking to boost growth generated by trade liberalization should also build strategies for other domestic reforms. Full story.

February 15, 2008, Roberta Gatti & Maddalena Honorati
Recent research shows that when informality---defined as self-reported lack of tax compliance by firms--is high, access to credit is low. The observed credit constraints most likely relate to the lower value placed on balance sheets and financial disclosure by credit institutions in environments where tax evasion is diffused. Full Text

Corruption in Small Business Fixed Investments: The Case of Indian Manufacturers
Dec 6, 2007, Taye Mengistae and Maddalena Honorati
The degree to which key business environment variables—such as labor regulations and power shortages—influence fixed investments by small and medium-sized enterprises (SMEs) depends on the incidence of corruption. This is one of the findings from a recent World Bank Policy Research Working Paper highlighted in a new research brief by Honorati and Mengistae. In a sample of SMEs from the World Bank Enterprise Survey of India, the investment rate is found to be lower with more stringent labor regulation, more difficult access to external finance, or more severe power shortages—which is not particularly surprising. The authors find, however, that these effects are more pronounced when managers are concerned about corruption in making business decisions than when they are not. Full Text

FOCUS: Macroeconomic Volatility and Development  Summer 2007 Issue
Norman Loayza, Claudio E. Raddatz, Luis Serven, Romaine Ranciere, Jaume Ventura
Reducing volatility in developing countries calls for a three-pronged strategy, including stronger shock absorbers. Full Text

Previous Issues

The Welfare Effects of a Large Depreciation: The Case of Egypt 2000-2005 
April 2007, Aart Kraay
Between 2000 and 2005 Egypt experienced a large nominal depreciation of the Egyptian pound. Much of it was concentrated around a sharp devaluation in early 2003, and over the entire period 2000-2005 the exchange rate depreciated by 27 percent in trade-weighted terms. This paper assesses the welfare implications of the changes in consumer prices accompanying this large movement in the exchange rate. Summary;  Full Text

More Research summaries