African economies are booming. This was a key message from a recent meeting organized by the City of London Corporation in collaboration with Rwanda and Tanzania, and DFID, Africa Matters and Africa Practice. Developed countries are looking at Africa once again, but it is different this time, it was suggested.

The volatility in commodity prices can still pose serious challenges for commodity dependent economies. In a period of rising commodity prices, understanding the effects of both beneficial and adverse sudden changes in prices is vital to enable a country to use such booms to harness its economic development process. Natural resources booms still prove to be a mixed blessing for developing countries as policy-makers respond to the challenges posed by the booms in very different ways. The recent large increase in copper prices (driven mainly by China and India's boost in demand for copper) offers a valid example of such challenges, as it has had a substantial impact on copper dependent economies, such as Zambia. The copper boom in Zambia has coincided with at least three other factors potentially causing an appreciation of the exchange rate: a write-off of the external debt, an increase in non traditional exports (NTEs) and a higher inflow of foreign aid. These factors have jointly contributed to a steep appreciation of the real exchange rate since 2004 and to a variation of relative prices in the economy, which may have a substantial impact on the country's economic development path. This has spurred a heated debate on the possible policy options to minimise the potential negative effects on the economy. This paper contributes to this debate by analysing the impact on the Zambian economy of the recent large inflow of foreign exchange in the context of the literature on the Dutch Disease, i.e. the adverse impact of a sudden discovery of natural resources on the national economy via the appreciation of the real exchange rate and the decline in export competitiveness. In particular, the study analyses the short-term effects of the copper boom and the resulting exchange rate appreciation in Zambia. Moreover, it suggests possible ways though which long-term effects operate and it discusses what possible policies may help to maximise the benefits from the large inflow of foreign exchange and minimise its potential negative impact.

Drawing on work commissioned by the International Development Research Centre (IDRC) to help its forward planning, this paper asks how the rural poor might benefit more fully from global economic processes. It argues that, whilst the scope for the more entrepreneurial to link into value chains associated with either agriculture or the nonfarm rural economy is present, its relevance for many of the rural poor is questionable. There is, however, substantial scope for labourers to participate in activities influenced by globalisation.
Policies therefore need to support temporary and permanent migration from rural to urban areas. As a prior condition for the design and implementation of such policies, political mindsets need to be changed to give fuller recognition to the value of such labour in supporting economic modernisation.

The role of investment, especially foreign direct investment (FDI), in driving economic growth and development has been a contested one ever since the UN development decade of the 1960s. There have always been views in favour of FDI and against it. Some argue that FDI leads to economic growth and productivity increases in the economy as a whole and hence contributes to differences in economic growth and development performances across countries, but others stress the risk of FDI destroying local capabilities and extracting natural resources without adequately compensating poor countries. This paper examines trends in the relationship between FDI and development in an historical context.

Relatively little is known about how regional integration affects poverty. Many suggest that increased investment would be one of the benefits of agreeing on regional integration provisions but this has not been put to the empirical test for South-South integration. This book examines the channels through which regional integration affects poverty and analyses empirically the effects on foreign direct investment.

'If current 'windfalls' in oil, gas and minerals continue, the MDG financing gap may be smaller for many sub-Saharan African countries than previously thought'.

The nature of industry is changing rapidly under the forces of globalisation. Those changes manifest themselves in increasing specialisation within manufacturing, thus creating implications for industrial development policy. As a result, there is an urgent need to define a role for public support in the context of the new industrial realities. Many questions arising from that need are yet to be answered. For instance, what is the need for, and nature of, public goods in industrial development? In what ways can the provision of public goods help to overcome market failures and promote industrial development? An analysis of the nature of market failures and public goods amid the new industrial realities could help national and international organizations, such as UNIDO, in their efforts to support the industrialisation process.    

This publication addresses the impact of foreign direct investment (FDI) on development and contains new contributions to an understanding of how policy may affect the interface between FDI and development. The experiences of several countries analysed in this book suggest that FDI has helped development and reduced poverty, in part because they have had the capacity to follow an active policy stance towards FDI. The chapters contributed by Dirk Willem te Velde on FDI and income inequality in Latin America, Michael Mortimore on TNC strategies and development in Latin America and the Caribbean and Watispaso Mkandawire on FDI in Zambia and Uganda bring together a number of different contemporary approaches to examining FDI and development. This publication includes a number of policy options relevant for developing country government efforts and donor agencies supporting developing country government efforts to improve the poverty and inequality reducing effect of FDI.

Although foreign direct investment (FDI) contributes to growth in developing countries, there is evidence that the benefits are not equally distributed. Foreign-owned firms tend to pay higher wages in developing countries, but skilled workers tend to benefit more than less-skilled workers. This conclusion is based on new research conducted into the effects of FDI on wages in five East Asian economies and the effects of foreign ownership in five African countries. While FDI may support development in the aggregate, more attention should be focused on the distribution of gains from FDI, notably effects on wage inequality.

There is now widespread recognition that achieving economic growth is the only way to secure long term development and poverty reduction. No country has succeeded in sustainably reducing poverty in the absence of growth. And growth is almost always good for the poor. We know the conditions that are conducive to growth, but that does not mean that achieving high and sustained rates of growth is easy - only a few countries have succeeded.

African economies are booming. This was a key message from a recent meeting organized by the City of London Corporation in collaboration with Rwanda and Tanzania, and DFID, Africa Matters and Africa Practice. Developed countries are looking at Africa once again, but it is different this time, it was suggested.

Agricultural productivity can be supported by well-designed social protection programmes

    * In relation to the productive sectors, social protection can enhance resilience in the face of threats, limit disinvestment, and, by reducing perceptions of high risk, promote investment by the poor.
    * Though some of the links between social protection and growth are specific to the agricultural sector, others are more generic.
    * Agriculture can be more socially protecting, and social protection more sensitive to impacts on production, if ministries of finance can leverage joined-up thinking and action.

This Briefing Paper summarises findings from recent analyses of tourism value chaines from a pro-poor perspective.  It illustrates that diagnostic tools such as local economic mapping and value chain analysis can be usefully applied to service sectors, and to explicitly assist in identifying poverty-targeted interventions, not just value chain competitiveness.  Findings from recent studies indicate that the share of destination level revenue accruing to the poor varies widely according to context, ranging from as low as 5% to over 25%.

This Briefing Paper summarises key findings from a comprehensive review of literature on the impacts that tourism has on poverty.   Findings from many disciplines and destinations build a more comprehensive, though still piecemeal, picture than existed before.   Tourism can have important pro-poor impacts and these can be strengthened by deliberate public policy interventions.  Tourism can affect the poor via three, quite different pathways. But there is not a single destination where poverty impact has been assessed in terms of all three.

This paper examines whether an effective state-business relationship (SBR) facilitated by an organized private sector improves firm performance in Zambia. Effective SBRs lead to a more optimal allocation of resources in the economy, including an increased effectiveness of government involvement in supporting private sector activities and removing obstacles. Being part of the governance and growth literature, effective SBRs may lead to and prioritize governance reforms. In-depth discussions of state-business
relations for sub-Saharan African countries have been patchy or absent; a detailed analysis of its effect on firm performance largely lacking.

This paper exploits the enterprise survey data of the World Bank Group for Zambia for around 200 firms with data on performance, including data that facilitate the calculation of productivity levels, and on the institutional context facing or perceived by firms. The paper finds that being a member of a business association improves firm performance in Zambia in the form of productivity improvements in the range of 37 to 41 percent. This finding is robust to including other variables that are commonly used to describe the investment climate, and robust to using estimates of productivity that account for endogeneity problems. The results show that the effectiveness of business association works through lobbying government
and to a lesser extent through solving of information related market and co-ordination failures. We also find that joining a business association is particularly useful for small and medium sized firms. Further, our results support the view that foreign owned firms lobby the government more effectively than their domestic counterparts.

The World Bank’s Doing Business 2007  tracks indicators of time and costto meet government requirements in business startup, operation, trade, taxation, and closure in 175 countries. The authors of the report argue that the report itself makes business easier for firms by suggesting that the mere publication of comparative data on the ease of doing business has inspired or informed 48 reforms around the world since 2003. But how clear is the ultimate target of the agenda
on business deregulation, and how and at what pace should it be reached?

Countries endowed with non-renewable natural resources (NRNR) are faced with substantial opportunities, but also great risks. Get the choice of industrial and economic policy, their sequencing, and alignment with global value chains right; support this with fiscal prudence, adequate institutional capacity and civil society participation; and NRNR revenues can be a force for sustained economic growth and social development. Get the policies, sequencing and alignment wrong; and ignore issues of absorptive capacity and good governance; and international experience tell us that a 'boom' in NRNR revenues can become a 'curse', depressing economic growth, worsening poverty and increasing political instability.

'Measures affecting temporary migration of services providers on a contract basis, as intra-corporate transferees, or as self employed, are high on the agenda at next month's WTO Ministerial meeting in Hong Kong, where developing countries hope they will get a fairer deal that will enable them to trade their way out of poverty'

Lead contractors are currently an underused resource for enhancing the economic multiplier effect of extractive industry projects.  The procurement process offers a mechanism for incentivising contractors to release these competencies, but there are risks, and managing these risks means also looking higher up the 'transaction chain'.

This paper discusses growth and investment experiences in sub-Saharan Africa, with an emphasis on country case studies. Sub-Saharan Africa’s growth has accelerated at the turn of the century, with GDP per capita having increased over four consecutive years since 1998. Here we discuss the differences in growth experiences across sub-Saharan countries.

Global experience demonstrates the importance of agricultural growth for poverty reduction in poor rural areas, but also identifies the limitations of agriculture in delivering poverty reduction, and the need for complementary growth in the nonfarm sector. Contrary to the thinking that dominates much of current development policy, subsidies need to play a crucial part in 'kick starting' food grain supply chains if increased smallholder productivity is to drive rural non-farm growth. Establishing the base conditions for such subsidies to work, designing and implementing them to be effective, and then phasing them out as soon as they have done their task, are major challenges facing policy makers concerned with reducing poverty in rural areas where most of the world’s poorest people live.

There is now widespread recognition that achieving economic growth is the only way to secure long term development and poverty reduction. No country has succeeded in sustainably reducing poverty in the absence of growth. And growth is almost always good for the poor. We know the conditions that are conducive to growth, but that does not mean that achieving high and sustained rates of growth is easy - only a few countries have succeeded.

DFIs have a general mandate to provide finance to the private sector for investments that promote development. Infrastructure fits within this remit. The raison d’etre of DFIs is to engage where the market fails to invest sufficiently. DFIs engage particularly in countries with restricted access to domestic and foreign capital markets. They specialise in loans with longer maturities and other financial products which are appropriate for financing long term infrastructure projects. DFIs aim to be catalysts, helping companies implement investment plans. They provide risk mitigation that enables investors to proceed with plans they might otherwise abandon. Further, because of the unique characteristics of DFIs they have a comparative advantage in providing finance that is related to the design and implementation of reforms and capacitybuilding programmes adopted by governments.

Agricultural productivity can be supported by well-designed social protection programmes

    * In relation to the productive sectors, social protection can enhance resilience in the face of threats, limit disinvestment, and, by reducing perceptions of high risk, promote investment by the poor.
    * Though some of the links between social protection and growth are specific to the agricultural sector, others are more generic.
    * Agriculture can be more socially protecting, and social protection more sensitive to impacts on production, if ministries of finance can leverage joined-up thinking and action.

'There have been some important messages on international development from the UK Government since the change of administration in June – and they signal changes of emphasis to which we might want to react.'

Asian countries are leading their own development and can build on this successes by strengthening measures to accelerate poverty reduction. Currently, the world's fastest growing region also contains more than two thirds of the world's poor. Progress towards targets embedded in the Millennium Development Goals (MDGs) is uneven, and, as the September 2005 Millennium Review Summit notes, faster progress is needed if goals are to be achieved, particularly against the 'non-income' MDGs.

In July 2006 the International Finance Corporation (IFC) – the private sector arm of the World Bank Group – launched a new set of business standards for managing environmental and social risks. Clients of the IFC who enter into project finance, equity investment, corporate finance or intermediary finance deals with IFC will shortly have to comply with these new standards.

 Many commercial banks – Barclays, HBSC, JPMorgan Chase, Standard Chartered and others – are already following IFC practice in this area. As such we may well be witnessing the dawn of a new international financial benchmark for environmental and social risk management for project finance in emerging markets. The new standards are aimed at private sector clients, firmly resting responsibility for achieving their compliance with these parties.

'Measures affecting temporary migration of services providers on a contract basis, as intra-corporate transferees, or as self employed, are high on the agenda at next month's WTO Ministerial meeting in Hong Kong, where developing countries hope they will get a fairer deal that will enable them to trade their way out of poverty'

The study looked at a number of current initiatives in the area of corporate economic and socio-economic benefits analysis and reporting, including the OECD Multi-National Enterprise and UN Global Compact principles, the Dow Jones Sustainability and FTSE4GOOD rating indices, the GRI 2002 Sustainability Reporting Guidelines, the IFC method for assessing project economic impact, and a recent study on the impact of business on poverty undertaken by Emerging Market Economics with the UK Department for International Development. We conclude that the discipline of economic impact reporting is not well evolved, and suffers from a number of persistent challenges.

This note discusses developed country support for growth and investment in sub-Saharan Africa, looking at: unilateral trade and investment policies; migration policies; aid policies; and fiscal policies.

This paper focuses on the political economy challenges to making growth policies pro-poor. It explores: the importance of governance, institutions, the developmental state and corruption in setting the conditions within which pro-poor growth becomes possible (or not); the role of power sharing and downwards accountability in pro-poor policy formulation and implementation; key challenges in policy formation and implementation; and implications for donor and government action.

This Project Brief summarises the findings of an ODI and FAO joint project on public–private partnership models to promote private investment in agricultural infrastructure. In 2007, FAO (UN Food and Agriculture Organization) commissioned ODI to assist in analysing a range of PPP models and model-variants that promote market-oriented agricultural development. The models are informed by case studies of market-orientated infrastructure in the following categories: (i) farm to market roads; (ii) water for irrigation; (iii) wholesale markets and trading centres; (iv) agro-processing facilities; and (v) information and communications technology.

This briefing paper discusses policies and programmes to strengthen the productive capacities of poor people, arguing that reducing poverty depends, to a large extent, on reducing rural poverty. Evidence suggests that increases in agricultural productivity are closely related to poverty reduction. However, whether or not poor rural people can access markets and services to identify and grasp opportunities greatly depends on the availability and quality of infrastructure and on the institutional environment.

This Briefing Paper provides an introduction to pro-poor growth. It reviews the concepts of growth, poverty reduction, inequality, and democracy and accountability in the pro-poor growth context. It also discusses the policy implications of a pro-poor growth approach and tools that can be used to direct such strategies.

This report describes an innovative approach to tourist development – a participatory pro-poor value chain analysis - that was supported by local stakeholders and funded by the Vietnam Private Sector Support Programme. This is probably the first truly participatory tourism value chain exercise ever conducted. Because this exercise was, in many ways, a voyage of discovery, the Report seeks to capture the essential elements of the process – as well as present the findings of the exercise.

This Briefing Paper summarises findings from recent analyses of tourism value chaines from a pro-poor perspective.  It illustrates that diagnostic tools such as local economic mapping and value chain analysis can be usefully applied to service sectors, and to explicitly assist in identifying poverty-targeted interventions, not just value chain competitiveness.  Findings from recent studies indicate that the share of destination level revenue accruing to the poor varies widely according to context, ranging from as low as 5% to over 25%.

This Briefing Paper summarises key findings from a comprehensive review of literature on the impacts that tourism has on poverty.   Findings from many disciplines and destinations build a more comprehensive, though still piecemeal, picture than existed before.   Tourism can have important pro-poor impacts and these can be strengthened by deliberate public policy interventions.  Tourism can affect the poor via three, quite different pathways. But there is not a single destination where poverty impact has been assessed in terms of all three.

Drawing on work commissioned by the International Development Research Centre (IDRC) to help its forward planning, this paper asks how the rural poor might benefit more fully from global economic processes. It argues that, whilst the scope for the more entrepreneurial to link into value chains associated with either agriculture or the nonfarm rural economy is present, its relevance for many of the rural poor is questionable. There is, however, substantial scope for labourers to participate in activities influenced by globalisation.
Policies therefore need to support temporary and permanent migration from rural to urban areas. As a prior condition for the design and implementation of such policies, political mindsets need to be changed to give fuller recognition to the value of such labour in supporting economic modernisation.

Asian countries are leading their own development and can build on this successes by strengthening measures to accelerate poverty reduction. Currently, the world's fastest growing region also contains more than two thirds of the world's poor. Progress towards targets embedded in the Millennium Development Goals (MDGs) is uneven, and, as the September 2005 Millennium Review Summit notes, faster progress is needed if goals are to be achieved, particularly against the 'non-income' MDGs.

Relatively little is known about how regional integration affects poverty. Many suggest that increased investment would be one of the benefits of agreeing on regional integration provisions but this has not been put to the empirical test for South-South integration. This book examines the channels through which regional integration affects poverty and analyses empirically the effects on foreign direct investment.

Global experience demonstrates the importance of agricultural growth for poverty reduction in poor rural areas, but also identifies the limitations of agriculture in delivering poverty reduction, and the need for complementary growth in the nonfarm sector. Contrary to the thinking that dominates much of current development policy, subsidies need to play a crucial part in 'kick starting' food grain supply chains if increased smallholder productivity is to drive rural non-farm growth. Establishing the base conditions for such subsidies to work, designing and implementing them to be effective, and then phasing them out as soon as they have done their task, are major challenges facing policy makers concerned with reducing poverty in rural areas where most of the world’s poorest people live.

'How can the corporate sector play a more effective part in tackling poverty?'

In July 2006 the International Finance Corporation (IFC) – the private sector arm of the World Bank Group – launched a new set of business standards for managing environmental and social risks. Clients of the IFC who enter into project finance, equity investment, corporate finance or intermediary finance deals with IFC will shortly have to comply with these new standards.

 Many commercial banks – Barclays, HBSC, JPMorgan Chase, Standard Chartered and others – are already following IFC practice in this area. As such we may well be witnessing the dawn of a new international financial benchmark for environmental and social risk management for project finance in emerging markets. The new standards are aimed at private sector clients, firmly resting responsibility for achieving their compliance with these parties.