|Thursday, 30 September 2004|
Investment key to development - World Bank
by Shirajiv Sirimane
The World Bank Development report has called on the international community to step forward more aggressively to assist in the development efforts of Third World countries.
The growth and poverty reduction unleashed by investment climate improvements in a country can easily dwarf the impact of international aid flows. The Report, released yesterday in Washington, calls on the international community to strengthen efforts to help developing countries improve their investment climates.
The report suggests removing trade restrictions, subsidies and other market distortions in developed countries that harm investment climates in developing countries. This can deliver benefits to developing countries worth more than four times the value of aid they receive to improve their investment climates.
Providing more effective assistance to help governments improve their investment climates is also essential. Technical assistance on the design and implementation of policy improvements can be especially potent, but currently receives fewer resources than the support directed to individual firms and transactions
The report states that accelerating growth and poverty reduction requires governments to reduce policy risks, costs, and barriers to competition facing firms of all types - from farmers and micro-entrepreneurs to local manufacturing companies and multinationals. "A good investment climate is central to growth and poverty reduction," said FranĜois Bourguignon, the World Bank's Senior Vice President and Chief Economist, in presenting the Report.
"A vibrant private sector creates jobs, provides the goods and services needed to improve living standards, and contributes taxes necessary for public investment in health, education, and other services. But too often governments stunt the size of those contributions by creating unjustified risks, costs, and barriers to competition."
The Report, A Better Investment Climate for Everyone, draws on surveys of over 30,000 firms in 53 developing countries, the Bank's Doing Business database, country case studies, and other new research. It highlights opportunities for governments to improve their investment climates by expanding the opportunities and incentives for firms of all types to invest productively, create jobs, and expand.
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