Private investment, government policy, and foreign capital in Zimbabwe

Policy measures to encourage recovery of private investment in Zimbabwe should focus not on measures to raise current profits but on measures to relieve supply side constraints, to reduce perceived risk, to clearly define the rules of the game for foreign investors, and to create a more favorable environment for investment decision making. Together these measures would constitute a radical shift in the business environment - one that need not lead to an unwarranted rise in either the foreign share of profits or the share of foreign capital in the economy. Dailami and Walton conclude that no simple policy shift will initiate and sustain the recovery of private investment in Zimbabwe. The reasons for weak private investment are complex. Adjustments in conventional areas are unlikely to work when the problem also lies in the overall environment for investment decision making and intangible perceptions of future risk.Economic Theory&Research,Environmental Economics&Policies,International Terrorism&Counterterrorism,Trade and Regional Integration,Financial Intermediation

Preserving the CFA Zone : macroeconomic coordination after the devaluation

On January 12, 1994, the CFA franc - the currency of the thirteen African states of the CFA Franc Zone - was devalued 50 percent. The event had been expected for some time, but the magnitude and one-shot nature of the devaluation posed problems for members of the zone's two monetary unions. The authors conclude the following about what has happened: (a) Inflation has been substantially lower than in most developing countries, but the mechanisms of macroeconomic discipline have been inadequate, especially for fiscal discipline. The recent crisis has its roots in failures of fiscal discipline as much as in the constraints on restoring competitiveness because of the fixed parity. (b) The transmission of inflation across states has not been a problem in the past, but could be more of one in the future with the common nominal shock, the temporary loss of the French franc as an anchor, and the rising importance of supranational quasi-fiscal deficit. (c) For macroeconomic coordination, it is appropriate to continue relying on a mixture of rules and discretion and not on the market, at least in the medium term. The 20 percent rule has been inadequate in the past and should be supplemented by annual targets for fiscal performance (including deficit of Gross Domestic Product ceilings, a primary surplus requirement, and no borrowing to finance current spending). (d) Sanction on errant states should be imposed through reduced access to borrowing. Central Bank and at least some foreign borrowing should be conditional on meeting the annually agreed upon targets. (e) The Central Banks'ability to impose these sanctions should be strengthened, possibly by channeling a portion of foreign credit going to the zone through the Central Banks. Technical assistance may also help. (f) Insulation can be affected by ensuring that quasi-fiscal deficits are explicitly financed by country budgets, reversing the recent trend to make them international by having the BCEAO finance part of the national banks'portfolio problems. (g) The current size of the quasi-fiscal deficit (and hence the future earnings position) of the two Central Banks should be assessed early and put on the budgets of the various national governments, with allocation based on the original source of the problem. If necessary, additional measures should be undertaken to secure a strong capital base for the Central Banks. (h) Exit from the zone is best discouraged by securing the zone's credibility. It should also be clear that those that exit because of macroeconomic problems will not have easier access to international sources of finance.Banks&Banking Reform,Economic Stabilization,Financial Intermediation,Economic Theory&Research,Public Sector Economics&Finance

Transfers and the transition from socialism : key tradeoffs

The old days in the now transition societies were characterized by stagnant incomes, rationed goods, and few civil liberties, but a high degree of income security. The early days of reform have brought crashing incomes, more goods, civil liberties, and rising insecurity. Most countries are set on a course toward some form of capitalism, which by definition means greater risk-taking, less security, and almost certainly greater inequality in income distribution. Should transfers be used to compensate for increasing insecurity and poverty? The short-run drop in incomes, the heritage of cradle-to-grave state protection, and the Western European vision of the welfare state provide compelling motivation for using transfers. But, argue the authors, there are significant tradeoffs between moving to a welfare state and shifting to dynamic, growing economies. The transition economies do not have the real levels of productivity or the tax bases needed to sustain the kind of tax effort a large-scale system of transfers would require. Short-run gains in security could in the long run mean insufficient private and public capital accumulation and lack of competitiveness. The result could be financial collapse (as witnessed in Ukraine) or an extreme form of Eurosclerosis (a possibility for Hungary or Poland). Under either scenario, those whom the transfers are supposed to protect - the old, the poor, the disabled, and the unemployed - are most likely to suffer disproportionately over the medium to long term, and probably even in the short term. In any viable scenario, transfers are likely to be important for both welfare and political reasons. Some options for providing transfers are more likely to be consistent with macroeconomic imperatives and to have relatively low adverse-incentive effects - for example, flat-rate (or flatter) pensions at quite low replacement rates, and local rather than general (income-tested) social assistance. The authors recommend using intrisically temporary measures - such as temporary employment schemes - in the transition. This avoids a permanent transfer burden while recognizing the severity of the interim transition period. In sum, the alternative of less reliance on comprehensive transfers puts more pressure on private coping mechanisms and will, in the short run, increase risk. But it may be the price of a viable transition to the growth that is essential to success.Environmental Economics&Policies,Banks&Banking Reform,Economic Theory&Research,Services&Transfers to Poor,Safety Nets and Transfers

Civil society, public action and accountability in Africa

This paper examines the potential role of civil society action in increasing state accountability for development in Sub-Saharan Africa. It further develops the analytical framework of the World Development Report 2004 on accountability relationships, to emphasize the underlying political economy drivers of accountability and implications for how civil society is constituted and functions. It argues on this basis that the most important domain for improving accountability is through the political relations between citizens, civil society, and state leadership. The evidence broadly suggests that when higher-level political leadership provides sufficient or appropriate powers for citizen participation in holding within-state agencies or frontline providers accountable, there is frequently positive impact on outcomes. However, the big question remaining for such types of interventions is how to improve the incentives of higher-level leadership to pursue appropriate policy design and implementation. The paper argues that there is substantial scope for greater efforts in this domain, including through the support of external aid agencies. Such efforts and support should, however, build on existing political and civil society structures (rather than transplanting"best practice"” initiatives from elsewhere), and be structured for careful monitoring and assessment of impact.Public Sector Corruption&Anticorruption Measures,Parliamentary Government,Social Accountability,Civil Society,ICT Policy and Strategies

Inequality of opportunity and economic development

Just as equality of opportunity becomes an increasingly prominent concept in normative economics, the authors argue that it is also a relevant concept for positive models of the links between distribution and aggregate efficiency. Persuasive microeconomic evidence suggests that inequalities in wealth, power, and status have efficiency costs. These variablescapture different aspects of people's opportunity sets, for which observed income may be a poor proxy. One implication is that the cross-country literature on income inequality and growth may have been barking up the wrong tree, and that alternative measures of the relevant distributions are needed. The authors review some of the detailed microeconomic evidence, and then suggest three research areas where further work is needed.Economic Theory&Research,Inequality,ICT Policy and Strategies,Poverty Impact Evaluation,Primary Education

Civil Society, Public Action and Accountability in Africa

This paper examines the potential role of civil society action in increasing state accountability for development in Sub-Saharan Africa. It further develops the analytical framework of the World Development Report 2004 on accountability relationships, to emphasize the underlying political economy drivers of accountability and implications for how civil society is constituted and functions. It argues on this basis that the most important domain for improving accountability is through the political relations between citizens, civil society, and state leadership. The evidence broadly suggests that when higher-level political leadership provides sufficient or appropriate powers for citizen participation in holding within-state agencies or frontline providers accountable, there is frequently positive impact on outcomes. However, the big question remaining for such types of interventions is how to improve the incentives of higher-level leadership to pursue appropriate policy design and implementation. The paper argues that there is substantial scope for greater efforts in this domain, including through the support of external aid agencies. Such efforts and support should, however, build on existing political and civil society structures (rather than transplanting "best practice" initiatives from elsewhere), and be structured for careful monitoring and assessment of impact.

Beyond the leader-as-hero: the ACE framework for leader success

Online article © 2007 Association of MBAsToo much belief in the leader-as-hero generates unrealistic expectations of senior executives and neglects significant variables which underpin leader performance and effectiveness. Based on a study of consulting assignments with senior executives, this article introduces a framework that can be used to assess the likelihood of leader success or dysfunction in specific situations. The article draws on recent field worki to suggest that leadership success is more likely if there is congruence between the leader's psychological make-up and predispositions, the internal 'state' of the organisation, and the external forces acting on that organisation

A touch of the ODs: watch out for the ‘organisational dementors’!

Online article © 2010 Association of MBAsLeaders and consultants are vulnerable to their work being misrepresented and ‘used’ by others to further personal agendas. Illustrated by personal consulting xperiences, this paper serves as a reminder of just how susceptible those in positions of influence are to being used as pawns in internal political battles. Dependent on internal sponsors for continued access & support, such dangers are particularly problematic for external advisors, coaches and consultants

Experiences with the use of axisymmetric elements in cosmic NASTRAN for static analysis

Discussed here are some recent finite element modeling experiences using the axisymmetric elements CONEAX, TRAPAX, and TRIAAX, from the COSMIC NASTRAN element library. These experiences were gained in the practical application of these elements to the static analysis of helicopter rotor force measuring systems for two design projects for the NASA Ames Research Center. These design projects were the Rotor Test Apparatus and the Large Rotor Test Apparatus, which are dedicated to basic helicopter research. Here, a genetic axisymmetric model is generated for illustrative purposes. Modeling considerations are discussed, and the advantages and disadvantages of using axisymmetric elements are presented. Asymmetric mechanical and thermal loads are applied to the structure, and single and multi-point constraints are addressed. An example that couples the axisymmetric model to a non-axisymmtric model is demonstrated, complete with DMAP alters. Recommendations for improving the elements and making them easier to use are offered

'Star Wars’: managers & MBAs in the corporate snakepit

Article © 2009 Association of MBAsThis article is a reminder that managing organisational politics remains an essential management skill. It highlights several ways in which a manager can tune-into the political and power dynamics of organisations. Aimed primarily at new managers and younger MBA graduates, who may be experiencing these managerial politics at work for the first time, the article provides advice based on the author’s own experiences to enable managers to negotiate some of the leadership pitfalls to enable them to develop into the type of leaders that all organisations need