Chad: rural policy note

The Chad Rural Policy Note builds on the findings of a rural sector stocktaking exercise. An initial draft of the note was prepared as a just-in-time study designed to contribute to the preparation of the Chad Interim Strategy Note. This finalized version of the note intended mainly to establish a knowledge baseline. In that context, the objectives of the note are to summarize existing information about the rural sector in Chad, identify knowledge gaps, and highlight key policy issues around which the dialogue in the rural sector might focus, with the objective of improving rural growth prospects and reducing poverty.Chad; poverty; public expenditures; rural development; finance; research and extension; markets; irrigation; climate change; livestock; cotton

Small enterprise growth and the rural investment climate : evidence from Tanzania

This paper analyzes characteristics of nonfarm enterprises, their employment growth patterns, and constraints in doing business in rural Tanzania. Using unique survey data, the authors describe a low-return sector struggling to compete in a difficult business environment. However, about one-third of rural enterprises are growing fast. Most enterprises engage in agricultural trade. Due to a rapidly growing agricultural sector in recent years, limiting demand-side constraints, rural enterprise constraints in Tanzania mainly operate from the supply side. This suggests that, in particular, access to finance, road infrastructure, and rural cell phone communication is correlated with employment growth. A major finding is that subjective and objective measurements of business constraints are broadly comparable. The authors discuss a number of factors that would help to unleash the full potential of private sector-led growth in rural areas. The findings show that marginal improvements in the rural investment climate matter for growth.Access to Finance,Rural Poverty Reduction,Microfinance,Banks&Banking Reform,

Central America's Macroeconomic Environment and the Role of the Investment Climate under Free Trade

Central America's economic performance in recent years has benefited from improved macroeconomic management, a favorable external environment, as well as rising investor confidence since the region has pursued greater access to global markets, particularly with the signing of DR-CAFTA in 2004. Nonetheless, while important reforms have been made, at the sectoral level, much remains to be done. The context of a less favorable global environment underlines the need to improve competiveness and enhance productivity. An improved investment climate would contribute to both and help to unleash the full potential of DR-CAFTA.Macroeconomic performance; investment climate; Guatemala; El Salvador; Nicaragua; Hounduras; Costa Rica; Panama

Decomposing Terms of Trade Fluctuations in Ethiopia

This paper proposes a technique to decompose short-run fluctuations in the terms of trade. Using Ethiopia as an example, we decompose the commodity terms of trade into various components to measure the impact of price and volume shifts as well as export diversification. We use monthly data from the past decade, including periods during the global food and financial crises. Our findings suggest that diversification out of traditional coffee exports to other export commodities successfully mitigated a terms of trade shock. Continued export diversification will be beneficial.Terms of Trade, Food Price Crisis, Financial Crisis, Ethiopia

Effects of primary, secondary, and tertiary education on economic growth : evidence from Guatemala

Loening investigates the impact of human capital on economic growth in Guatemala during 1951-2002 using an error-correction methodology. The results show a better-educated labor force having a positive and significant impact on economic growth. Consistent with microeconomic studies for Guatemala, primary and secondary education are most important for productivity growth. These findings are robust while changing the conditioning set of the variables, controlling for data issues and endogeneity. Due to an environment of social and political conflict, however, total factor productivity has been slightly negative for the past decades, and there is evidence of a missing complementarily between the country's skills and its technology base. The author presents a growth-accounting framework which takes into account quality changes of physical capital, and differentiates by level of education. It shows that the human capital variables explain more than 50 percent of output growth. Of these, secondaryschooling is the predominant determinant of growth.Achieving Shared Growth,Economic Growth,Economic Theory&Research,Health Monitoring&Evaluation,Governance Indicators

Lao People’s Democratic Republic: responding to rice price inflation

The objective of this study is to identify likely factors driving the 2010 rice price hike and suggest options to manage rice price volatility in the future. Regional trade is likely the main proximate cause for high glutinous rice prices. Trade with Vietnam was likely the main reason for short-term price fluctuations, while trade with Thailand affects medium- and long-term price trends. By contrast, traditional supply and demand factors explain only a small part of rice price inflation. There is, however a possibility that major supply shocks may be regional, which could affect Laos, Thailand, and Vietnam simultaneously. The effectiveness of government policy measures has been mixed. There is a need to closely coordinate rice production and trade policies in order to effectively manage price volatility. Future analysis should look at regional glutinous rice production trends and related trade flows.Food prices; rice prices; sticky rice; regional trade; economic policy; Lao PDR; Thailand; Vietnam

Decomposing Terms of Trade Fluctuations in Ethiopia

This paper proposes a technique to decompose short-run fluctuations in the terms of trade. Using Ethiopia as an example, we decompose the commodity terms of trade into various components to measure the impact of price and volume shifts as well as export diversification. We use monthly data from the past decade, including periods during the global food and financial crises. Our findings suggest that diversification out of traditional coffee exports to other export commodities successfully mitigated a terms of trade shock. Continued export diversification will be beneficial

Decomposing Terms of Trade Fluctuations in Ethiopia

This paper proposes a technique to decompose short-run fluctuations in the terms of trade. Using Ethiopia as an example, we decompose the commodity terms of trade into various components to measure the impact of price and volume shifts as well as export diversification. We use monthly data from the past decade, including periods during the global food and financial crises. Our findings suggest that diversification out of traditional coffee exports to other export commodities successfully mitigated a terms of trade shock. Continued export diversification will be beneficial

Inflation Dynamics and Food Prices in an Agricultural Economy: The Case of Ethiopia

Ethiopia has experienced a historically unprecedented increase in inflation, mainly driven by cereal price inflation, which is among the highest in Sub-Saharan Africa. Using monthly data over the past decade, we estimate error correction models to identify the relative importance of several factors contributing to overall inflation and its three major components, cereal prices, food prices and non-food prices. Our main finding is that, in the long run, domestic food and non-food prices are determined by the exchange rate and international food and goods prices. In the short to medium run, agricultural supply shocks and inflation inertia strongly affect domestic inflation, causing large deviations from long-run price trends. Money supply growth affects food price inflation in the short run, though excess money supply does not seem to drive inflation in the long run. Our results suggest a challenging time ahead for Ethiopia, with the need for a multipronged approach to fight inflation. Forecast scenarios suggest monetary and exchange rate policies need to take into account the cereal sector, as food staple growth is among the key determinants of inflation, assuming a decline in global commodity prices. Implementation of successful policies will be contingent on the availability of foreign exchange and the performance of agriculture.Agriculture; Cointegration analysis; Ethiopia; Exchange rate; Money demand; Food prices; Forecast; Inertia; Inflation

Inflation dynamics and food prices in an agricultural economy : the case of Ethiopia

Ethiopia has experienced a historically unprecedented increase in inflation, mainly driven by cereal price inflation, which is among the highest in Sub-Saharan Africa. Using monthly data from the past decade, the authors estimate error correction models to identify the relative importance of several factors contributing to overall inflation and its three major components, cereal prices, food prices, and non-food prices. The main finding is that, in a longer perspective, over three to four years, the main factors that determine domestic food and non-food prices are the exchange rate and international food and goods prices. In the short run, agricultural supply shocks and inflation inertia strongly affect domestic inflation, causing large deviations from long-run price trends. Money supply growth does affect food price inflation in the short run, although the money stock itself does not seem to drive inflation. The results suggest the need for a multi-pronged approach to fight inflation. Forecast scenarios suggest monetary and exchange rate policies need to take into account cereal production, which is among the key determinants of inflation, assuming a decline in global commodity prices. Implementation of successful policies will be contingent on the availability of foreign exchange and the performance of agriculture.Markets and Market Access,Currencies and Exchange Rates,Economic Theory&Research,Food&Beverage Industry,Emerging Markets