An economic integration zone for the East African Community : exploiting regional potential and addressing commitment challenges

Integration in the East African Community offers significant opportunities not only to expand trade among member states, but more importantly to scale up regional production to take advantage of much larger global market opportunities. Special economic zones are a potentially valuable instrument to facilitate the integration of regional value chains in support of this scaling up. They also have the potential to deliver powerful demonstration effects on the benefits of integration and to help entrench the integration process. This paper discusses the proposal for developing an"economic integration zone"in the East African Community. The benefits of such a zone could be substantial, as would be the practical challenges to implementation -- in particular the political economy challenges. However, a number of institutional and commercial solutions exist to address these challenges.Debt Markets,Emerging Markets,Economic Theory&Research,Banks&Banking Reform,Public Sector Economics

Economic Growth in Egypt: Constraints and Determinants

Egypt accelerated its ongoing transition from a public sector dominated economy to a private sector led and market oriented economy after the collapse of oil prices in the mid-1980s. Some aspects of the economy, such as trade policy, have been substantially transformed since then whereas other aspects, such as public control of the financial sector, have experienced less change in substance. We examine some determinants of growth in Egypt since the mid-1980s using insights from both standard econometric techniques and a diagnostic approach proposed by Hausmann, Rodrik and Velasco (2004). We find that trends in government consumption, credit to the private sector and the average growth rate of OECD countries have been significant determinants of growth in Egypt in the past. We also present evidence that suggests that inefficiency of financial intermediation is a significant current constraint on growth.Economic growth, Egypt, growth diagnostic, binding constraint, financial intermediation

Pension Reform in a Highly Informalized Post-Soviet Economy

Pension reform is now on the national agenda in most post-Soviet countries. These countries have highly informalized economies, which means that large areas of economic activity go unreported to the authorities. This paper deals with the problem of pension reform in a highly informalized post-Soviet economy, Ukraine. It includes an analysis of causes and consequences of informalization, a general description and analysis of trends in the Ukrainian pension system, and a discussion of different approaches to reform. The paper describes an approach to modeling labor and capital flows between the formal and informal sectors using a gravity model. It also reports and discusses results of simulations of different scenarios of pension reform in Ukraine. Policy-relevant findings of the study are as follows: • Public trust in reform is crucial. Therefore, in designing and implementing reforms exceptional attention should be paid to trust-building measures; • Debt-financed transition to a fully-funded pension system in an informalized post-Soviet economy can lead to higher efficiency gains than a tax-financed transition. This is due to an alleviation of the tax burden, which encourages a decline in unreported economic activity. • Provided that public trust in the reform is sufficient, the larger the fully-funded system, the greater will be the decline in informalization.pension reform, informal economy, transition, post-Soviet economy, Ukraine

Systems Analysis of Social Security in a Transition Economy: The Ukrainian case.

This paper deals with a case study on the social security system in a transition economy in Ukraine. The severe socioeconomic crisis in Ukraine, including a huge decline of production, hyperinflation, and the informalization of the economy, caused both a substantial reduction of social security contributions and an increase in the number of people who need assistance. The creation of a new sustainable economic system in the country requires the development of a new model of social security suited to the realities of a market economy. The objective of this paper is to investigate the current situation, trends, and possible ways of reforms in the Ukrainian social security system, taking into account specific features of the national economy, in particular the informal sector. The analysis focuses on the key component of social security - the pension system - and combines both qualitative and model- based approaches.social security transition economy Ukraine systems analysis

Administrative fees and costs of mandatory private pensions in transition economies

This paper discusses fees and costs of pension companies in transition economies drawing on examples from four countries Croatia, Hungary, Kazakhstan and Poland where second pillar pensions have the longest history of implementation. It finds that at current levels, charges are likely to reduce returns on individual account balances by around 1% per annum on average. Exact rates vary by country and company. Fee structures are complex and, generally speaking, poorly understood by consumers. The limited information on costs that is available suggests that, by and large, companies are able to meet their operating costs within a few years after starting operations. There are large sunk costs in setting up business. As a result the industry displays strong economies of scale. Based on the available evidence, the paper estimates fixed costs to be of the order of $35 per account per year (the 95$21 $49 per account per year). Given costs of this order of magnitude, individual accounts need to be of the order of 4 6% of average wages for the second pillar to be viable i.e. to deliver a return greater than what can be expected from an unchanged first pillar.

Systems Analysis of Social Security in a Transition Economy: The Ukrainian Case

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