1 / 23

Sub-national Investment Climate

Sub-national Investment Climate . Mehnaz S. Safavian Jevgenijs Steinbuks The World Bank Group Investment Climate Department. Local Versus National Investment Climate.

flo
Download Presentation

Sub-national Investment Climate

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Sub-national Investment Climate Mehnaz S. Safavian Jevgenijs Steinbuks The World Bank Group Investment Climate Department

  2. Local Versus NationalInvestment Climate The most important forces combating poverty today are those activists who are fighting for better local governance – accountability, transparency, and the rule of law at the local level, and by using tools to spotlight corruption, mismanagement and tax avoidance. Tom Friedman, NY Times OP/ED, June 6, 2004

  3. Sub-national Investment Climate • The Investment Climate and Why it Matters • Local versus National Investment Climate • What Investment Climate Surveys can Tell Us • Policy and Operational Implications

  4. The Investment Climate and Why it Matters • Investment Climate is determined by: • Policies - the nature of the regulations imposed on businesses, • Institutions - the effectiveness of institutions charged with enforcement of those regulations, and • Infrastructure - the level and quality of financial and physical infrastructure services, and the degree of physical security. • Competition –drives innovation and investment.

  5. The Investment Climate and Why it Matters • The Investment Climate Matters because: • Attract needed domestic and foreign investment. • Linked to higher economic growth and higher productivity. • Linked to poverty reduction (via economic growth).

  6. Local versus National Investment Climate • Determinants of IC are often found at the sub-national (regional, municipal) level of government, • Evidence of high regional disparity for both private sector development and poverty levels, • In the context of decentralization agendas, • Reform at the sub-national level can be more demand driven, locally-owned.

  7. Investment Climates Diverge Across Municipalities

  8. What drives within-country variability of investment climate? Capacity Policies Nat. Endow. Governance

  9. What drives within-country variability of investment climate? • Policies per se (variable), • Tax Rates, Licenses, Permits • Implementation capacity (variable), • Management time dealing w/officials • Unfair/Informal Competition • Tax Administration

  10. What drives within-country variability of investment climate? • Governance (variable), • Bribe tax • Inspections • Location, natural endowments (fixed), • Access to finance • Infrastructure/Power outages • Trade

  11. Incentives to Improve Investment Climates • At the sub-national level, good investment climates are linked to: • Higher Wages • Higher Firm Productivity • More Innovation • More FDI

  12. IC and Productivity

  13. IC and Wages

  14. IC and FDI

  15. IC and Technology

  16. Policy and Operational Implications • IC survey results can be used to: • Increase accountability of local/regional govts, • Provide incentives for policy reform, • Foster competition among cities (e.g. China), • Benchmark progress over time, • Tailor t.a. and/or lending at the sub-national level.

  17. China: Using sub-national data to foster competition among regions

  18. To find out more about IC Surveys • Mehnaz Safavian –msafavian@worldbank.org • ICS Portal http://rru.worldbank.org/external/cicic/portal.htm • Thank you!

More Related