Archive for January, 2010
Doing Business 2010: A record in business regulation reform
Since 2004 Doing Business has been tracking regulatory reforms aimed at improving the ease of doing business. Despite the challenges presented by the financial crisis, the number of reforms hit a record level this year. Between June 2008 and May 2009, 287 reforms were recorded in 131 economies, 20% more than the year before. Reformers focused on making it easier to start and operate a business, strengthening property rights and improving the efficiency of commercial dispute resolution and bankruptcy procedures.
Two regions were particularly active this year: Eastern Europe and Central Asia and the Middle East and North Africa. In Eastern Europe and Central Asia, 26 of the region’s 27 economies reformed business regulation in at least one area covered by Doing Business. Governments in the Middle East and North Africa are reforming at a similar rate, with 17 of 19 reforming in 2008/09. In both cases, competition among neighbors helped inspire widespread reform.
Singapore, a consistent reformer, is the top-ranked economy on the ease of doing business for the fourth year in a row, with New Zealand as runner-up. But most of the action occurred in developing economies. Two-thirds of the reforms recorded in the report were in low- and lower-middle-income economies. For the first time a Sub-Saharan African economy, Rwanda, is the world’s top reformer of business regulation, making it easier to start businesses, register property, protect investors, trade across borders, and access credit.
Doing Business ranks economies based on 10 indicators of business regulation that record the time and cost to meet government requirements in starting and operating a business, trading across borders, paying taxes, and closing a business. The rankings do not reflect such areas as macroeconomic policy, security, labor skills of the population or the strength of the financial system or financial market regulations.
Once again the most popular reform measure fell in the category of starting a business, with three-quarters of economies making it easier to start a business. Paying taxes was the next most popular category. The financial crisis has also prompted governments to act in areas where regulatory reform may be more difficult and require more time. During the past year 18 economies reformed their bankruptcy regimes, including several economies in the hard-hit region of Eastern Europe and Central Asia. In times of recession, keeping viable companies operating as a going concern and preserving jobs becomes especially important.
Note: Not all indicators are covered for the full period. Registering property was introduced in Doing Business 2005, and paying taxes, trading across borders, dealing with construction permits and protecting investors in Doing Business 2006.
Ethiopia: Areas of Reform: Starting a business, Registering property, Enforcing contracts
Rank in Doing Business 2010: 107
Source: http://www.doingbusiness.org/
China invests in Ethiopia but at what cost?
MARY FITZGERALD in Addis Ababa
Ethiopia Love China
China’s minister for commerce says trade with Ethiopia will reach $3 billion by 2015
ASK AN Addis Ababa taxi driver to take you to Ethio-China Friendship Road and he might just scratch his head.
The renaming of Wollo Sefer, one of the Ethiopian capital’s main thoroughfares, in tribute to the country’s burgeoning ties with Beijing might be obvious from the new street signs but it has yet to filter down to everyday use.
The road is not the only marker of China’s growing engagement with Ethiopia.
Addis Ababa’s ultramodern airport was built by the Chinese, as was the city’s ring road and flyover.
An extensive renovation of the African Union headquarters in downtown Addis is being financed by the Chinese to the tune of more than $100 million (€71 million).
Across the city, a Chinese government-built school, designed to cater for up to 3,000 students, offers Mandarin classes as part of its curriculum.
Scores of Ethiopians have been given scholarships to study subjects including engineering and architecture in China.
The Chinese restaurants and clinics advertising acupuncture and traditional herbal remedies that have become part of the landscape in almost every African city in recent years are here too. According to local media, some 1,000 Chinese companies operate in Ethiopia.
Besuited Chinese businessmen can be seen discussing deals in Addis hotel lobbies, while engineers and others fresh from working on road and telecommunications projects or building power stations and water supply systems haggle for souvenirs in the city’s sprawling Merkato before flying home to Beijing.
In some Ethiopian towns and villages, it is not uncommon for foreigners to find themselves being greeted by children yelling “China, China”.
Earlier this month Chen Deming, China’s minister for commerce, was in town predicting that trade volume between the two countries will reach $3 billion by 2015. Chinese investment in Ethiopia amounted to just under $1 billion last year, and there is much talk of future investment in agricultural projects.
“China and Ethiopia have been mutually supportive on the political front and closely co-operating on the economic front,” Chen said, going on to use the stock expression Chinese officials trot out when discussing relations with African states: “It is fair to regard the Sino-Ethiopian friendship as an all-weather one.”
China’s new engagement with Africa has played out very differently across the continent, helping revitalise moribund economies in some countries, while breeding resentment elsewhere due to support for unsavoury regimes, poor work practices and threatened local industries.
There have been a few cautionary tales for the Chinese along the way. In 2007, for example, nine Chinese oil workers were killed and seven briefly kidnapped in the restive Ogaden area of eastern Ethiopia.
Ethiopian prime minister Meles Zenawi says African states must be prudent in setting the parameters of the relationship.
“The Chinese interest in Ethiopia has been nothing short of a godsend,” he tells The Irish Times.
“We have benefited massively from it, but like everything else it is capable of becoming a nightmare . . . It is up to the host countries as to how they use the available resources from the Chinese in the best possible manner. Those who do will benefit, those who don’t may not benefit as perhaps they ought to.”
China’s assistance in building infrastructure and its investment in manufacturing has been invaluable for Ethiopia, Meles says.
“We need investment from any quarter we can get it. The Chinese have been more aggressive in investing in Ethiopia than many others and our hope is that Chinese investment will entice not only additional Chinese investment but also investment from other countries.”
But, as in every African country wooing Beijing, there is debate over who stands to gain. A 2008 study by an economist at Addis Ababa University noted that while Ethiopian consumers will benefit from cheap Chinese imports, small local firms, particularly in the clothing and footwear sectors, will lose out.
Opposition figures, like many of their counterparts elsewhere in Africa, mutter darkly about deals agreed behind closed doors, and speculate on the motives of both the government and Beijing.
One told me he suspects that the Meles regime sees China’s overtures as an opportunity to shore up support where it matters on the world stage.
Whatever way the debate shifts, however, the one thing everyone seems to agree on is that the Chinese are here to stay.
Source: The Irish Times
Bodies found from Ethiopian Airlines crash
By Cal Perry and Nada Husseini,
CNNJanuary 25, 2010 6:42 a.m. EST
A soldier inspects debris washed up after an airliner crashed off the Lebanese coast.STORY HIGHLIGHTS Rescue crews recover 23 bodies off the Lebanese coast Wife of the French ambassador to Lebanon among passengers Aircraft, carrying 90 people from Beirut, Lebanon, was bound for Addis Ababa, Ethiopia Authorities did not immediately know the cause of the crash Beirut, Lebanon (CNN) — British, French and Cypriot aircraft joined rescue crews searching the Mediterranean Sea off the coast of Lebanon on Monday where an Ethiopian Airlines flight crashed with 90 people aboard. By midday Monday, crews had found 23 bodies, but no survivors, the state-run Lebanese National News Agency reported. Prime Minister Saad Hariri announced a day of mourning for the victims of the crash, ordering all government departments to close, the agency reported. He praised security forces and the Red Cross for their efforts in the aftermath of the accident. Ethiopian Airlines Flight 409 left Rafik Hariri International Airport in Beirut about 2:30 a.m. and was headed to the Ethiopian capital, Addis Ababa. It disappeared from radar a few minutes after takeoff, said Ghazi El Aridi, Lebanon’s minister of public works and transportation. Authorities did not immediately know the cause of the crash. “We don’t believe that there is any indication for sabotage or foul play,” Lebanese President Michel Sulayman said. The airline said a 14-member team of investigators was at the scene of the accident. Video: Ethiopian airliner crashes RELATED TOPICS Air Disasters Ethiopia “We want to figure out the reasons behind this plane crash and we will be very transparent in informing everyone of what happened,” Hariri said. The Boeing 737-800 had seven crew members and 82 passengers — 51 Lebanese nationals, 23 Ethiopians, two Britons and citizens from Iraq, Turkey, Syria, Canada, Russia and France, the airline said. An earlier tally provided by the Lebanese government varied slightly. Among the passengers was the wife of the French ambassador to Lebanon, said Anne Charlotte of the French embassy. The plane crashed about 3.5 km (2.1 miles) west of the town of Na’ameh. Na’ameh is 15 km (9 miles) south of Beirut. As worried family members gathered at the Beirut airport for news, the army and the U.N. Interim Force in Lebanon continued to scour the crash site for survivors. “We hope that we will be able to rescue as many survivors, but the weather conditions are very bad,” Sulayman said. Government-owned Ethiopian Airlines is one of the largest in Africa. Unlike several African carriers that are not allowed in European air space because of shoddy safety records, Ethiopian Airlines serves Europe. It serves three other continents as well, for a total of 56 destinations. The airline has such a commendable safety record that some expanding airlines in Asia have lured away its pilots at high pay, The New York Times reported in 2006. The airline has experienced two fatal crashes since 1980. In November 1996, a flight bound for Ivory Coast, also known as Cote D’Ivoire, was hijacked by three men who demanded that the pilot fly to Australia. The pilot attempted an emergency landing near the Comoros Islands off Africa as the plane ran out of fuel, but crashed. About 130 of the 172 people aboard died, according to published reports. And in September 1988, a flight struck a flock of birds during takeoff. During the crash landing that followed, 31 people of the 105 people aboard died.
The dollar’s share of world reserves has dropped
- 2000: 71%
- 2005: 67%
- 2009: 61%
WHAT THEY MEAN:
The dollar is used to price gold at the London Bullion Market Association and cocoa futures at the New York Board of Trade. Vendors prefer it to the Sucre and the kip as they settle bills for hot soup in La Paz and T-shirts in Vientiane. Accountants at the People’s Bank of China in Beijing and the Central Bank of the Republic of China in Taipei use it as their main currency reserve. And foreign exchange traders use it in 86 percent of the world’s $4 trillion in daily currency turnover. Having taken over the reserve-currency role from the pound in 1939, the dollar has held these mighty roles for a life-time.
The next life, though? The dollar’s reserve role peaked at 84.5 percent of all reserves in 1973 (for aficionados, this was just before the “Nixon shock” and the return of fluctuating currency rates), retreated to about 65 percent in the gloomy 1970s and 1980s, and rebounded again above 70 percent by the year 2000. And since then it has dropped fast.
As of late 2009, world reserves were about $7.5 trillion, or about 10 percent of world GDP. Of the $4.34 trillion in “allocated” holdings — i.e. the reserves held by 140 countries which make their divisions by currency public — the biggest pool is China’s $2.4 trillion, followed by Japan’s $1.0 trillion, Russia’s $440 billion and Taiwan’s $350 billion. Dollars accounted for $2.73 trillion of this allocated total, euros $1.23 trillion, sterling $192 billion and yen $143 billion. (“Unallocated” reserve holdings are those in countries not choosing to report to the IMF. The IMF is chastely quiet about their identity, but countries in question appear from outside evidence to be mostly oil-producers; their currency holdings are probably similar to those of the reporting countries.) With a declining dollar value and economic troubles in the United States, the dollar’s share of allocated reserves fell to 67 percent in 2005 and 61 percent by late 2009. Holdings of UK pounds and euros are rising as the dollar retrenches; the shift presumably reflects a combination of lower dollar values with voluntary choices to invest in other currencies.
Source: Trade Fact
Ethiopia to expand its trade size with China.
Ethiopian Prime Minister Meles Zenawi said Monday his country hopes to expand its trade size with China.
During his talks with visiting Chinese Minister of Commerce Chen Deming, Meles said his country hopes to join hands with China to promote investment coöperation in areas like infrastructure and manufacturing, adding that Ethiopia is willing to give more attractive investment environment for Chinese firms.
The 2006 Beijing Summit of the Forum on China-Africa Cooperation gave a strong impetus to the development of Africa-China economic and trade coöperation, said the Ethiopian prime minister. He believed the success of the Fourth Ministerial Conference of the China-Africa Cooperation Forum would promote Africa-China friendly coöperation to a further step forward.
The current all-round coöperation between the two countries has maintained good momentum and played an important role in Ethiopia’s economy, he added.
For his part, Chen said the bilateral trade volume reached a historical high of 1.376 billion U.S. dollars during the first 11 months of last year against the backdrop of international financial crisis, up 12.4 percent over the same period of the previous year.
At the just-ended Fourth Ministerial Conference of the China-Africa Cooperation Forum in Egypt, China announced the eight new measures to enhance coöperation with Africa, according to Chen, who arrived here for a two-day visit.
The Chinese side is willing to implement the eight new measures as an opportunity to promote China-Ethiopia economic and trade relations to a new level, he said. China welcomes Ethiopian firms to further develop the Chinese market and also encourage Chinese firms to expand investment in Ethiopia, said Chen.
Source: Xinhua
U.S. imports fell by $700 billion last year.
THE NUMBERS: U.S. share of world imports – 
2000: 19.4%
2005: 16.1%
2009: 12.9%
WHAT THEY MEAN:
As businesses cut back investment and families stayed out of malls and auto dealerships last year, America’s import bill plunged by about 30 percent (based on nine months’ results), from $2.52 trillion worth of goods and services in 2008 to a likely $1.85 trillion or so in 2009. The $700 billion drop includes a decline of about $240 billion in energy, $350 billion in manufactured goods, $50 billion in services and smaller figures in farm products, metal ores and other resources. Four examples from resource trade, capital goods, big family purchases and shopping:
Oil imports are down by half, from $275 billion in 2008 to $134 billion in 2009, and cars from $129 billion to $74 billion;
Steel imports have dropped from 31 million tons to 15 million tons; digital cameras are off a bit less, from 52 million cameras in 2008 to 42 million in 2009.
How unusual is this? In the sixty years between 1948 and 2008, imports grew on average by 10.1 percent per year. Imports fell in dollar terms seven times, during the recessions of 1949, 1954, 1960, 1974, 1981-82, 1991 and 2001. The steepest drop was 6.4 percent in 1949, followed by a 3.7 percent decline in 1975. Last year’s 30 percent drop was the steepest fall in imports since 1938, and sharper than those of the first year of the Civil War, World War I and World War II. Therefore, very unusual.
Related point: The drop, though unusual in its magnitude, accelerates a little-noted trend extending across the decade. Though press reports and some political debate suggest alarm over import competition, America’s share of the world’s imports has been declining since the turn of the century. Between 2000 and 2008, as American manufactured imports grew by $460 billion, China’s manufactured imports rose by $560 billion and the EU’s by $660 billion. Thus at the turn of the century, the WTO’s statistical reports found Americans buying 19.4 percent of all world exports. By 2005 the figure was down to 16.1 percent. Over the first nine months of 2009, it was 12.9 percent.
FURTHER READING:
Where to from here? The import drop reflects generally bad economic conditions, but also perhaps a long-term change in public behavior: American family savings rates have risen from about $150 billion per year between to almost $500 billion this year. Healthy in the long run (assuming Americans continue to save after the crisis), this also means that Americans are shopping less, and therefore personal consumption will be a less powerful source of growth in the 2010s than in the 2000′s. A shift of $300 billion to savings implies that the country needs to find a source of growth – and the only logical option is exports – amounting to 2 percent of GDP.
Thus as the health care debate nears a conclusion, the DLC offers a trade strategy for the United States, refocused on (a) the industries most likely to support growth, innovation and quality employment in the United States over the next decade, and (b) the big economies abroad, including the EU, China, Japan, Canada, Mexico and others, that account for most U.S. trade: http://www.dlc.org/ndol_ci.cfm?kaid=108&subid=900010&contentid=255039
Special New Year fact-bonus -
Trade Fact of the Millennium — Last year’s trade collapse in the United States has a worldwide match: total world exports seem to have dropped from about $16.1 trillion in exports in 2008 to $11.2 trillion or so in 2009. Should this count as the “Trade Fact of the Decade”? (And therefore, technically, as the “Trade Fact of the Century” so far, and also the “Trade Fact of the Millennium.”) Yes, if it marks a permanent shift away from integration rather than an acute crisis from which the global economy will recover. DLC Trade Project staff offer four more options, in alphabetical order and in a few cases with questions:
1. Accelerating Integration: The evolution of telecommunications and logistical industries cut the cost of moving goods and services around the world, leaving the global economy noticeably more integrated in 2010 than in 2000. The deployment of hundreds of thousands of miles of fiber-optic submarine cable, and the launch of about 400 communications satellites, cut the cost of an international phone call from the U.S. from about 49 cents to eight cents a minute, and extended Internet service from 360 million people in 2000 to 1.8 billion as 2010 begins. Meanwhile the world’s container-ship fleet tripled its capacity, from 2,630 ships with an average load of 1,770 twenty-foot containers to 4,640 ships carrying an average of 2,620 containers each. The evolution of the air cargo industry, though harder to measure, but may have been even faster. Stalemated Doha Round or not, the ratio of imports to world GDP rose from 24.6 percent in 2000 to 33 percent in 2008. (But count on a lower figure for 2009.)
Reading: The DLC’s July 2008 White Paper, Winning in the World Economy II, on America’s challenges and policy to match them: http://www.dlc.org/ndol_ci.cfm?kaid=108&subid=206&contentid=254684
2. Asian Revival: From 2000 to 2010, Asia’s economy (including Japan, Korea, China, Taiwan, Hong Kong, the 10n ASEAN members, India, Bangladesh, Pakistan, Sri Lanka, Nepal and Afghanistan) rose from just over 25 percent of world GDP to just under 33 percent. Asia’s urban population, rising by 300 million, approached half the world total; the Asian share of scientific research and development from about 26 to 30 percent. China now runs the world’s fastest short- and long-route trains and is home to four of the world’s ten tallest buildings (not counting Taipei 101). Asia still has far to go for a genuinely complete revival, though. Economic historian Angus Maddison, the guru of these things, finds Asia accounting for 60 percent of global GDP in the 18th century. Other questions — Can investment in research and infrastructure make China a creative economy as well as an industrial power, or will intellectual property theft, and political censorship of the Internet, social-network sites and media halt its evolution? Will aging and coming population declines slow Asian growth generally in the next decade?
Reading: The DLC’s Ed Gresser and the German Marshall Fund’s Dan Twining look at America’s Asian relationships and policy in Shock of the New, published by the National Bureau of Asian Research in February 2009: http://www.nbr.org/Publications/issue.aspx?id=
d4532298-5457-4edf-826b-2640a8ea1246
3. Multilateralism Stalemated? The world’s two big internationalist projects — the WTO’s Doha Round and the Copenhagen climate-change agreement — remain blocked as big middle-income countries and established rich countries debate their respective obligations. (Financial-system reform has done better, with a shift in IMF management and apparent replacement of the G-8 by the G-20; regional integration, especially EU expansion and Asian institution-building of various kinds, went faster still.) Question: Do stalemates in big global negotiations portend a fundamental impasse, or a transitional problem solved in the 2010s as big developing countries match influence with obligations?
Reading: In Democracy: A Journal of Ideas, the DLC’s Gresser imagines, perhaps too hopefully, a Global Environmental Organization (GEO) to oversee a climate-change agreement and improve international environmental policy in general: http://www.democracyjournal.org/article.php?ID=6711
4. The oil boom and the petro-state — Between 2000 and 2008, the price of oil rose from $25 to $100 per barrel. Rice prices tripled, copper prices quadrupled, rubber rose even faster. The oil surge in particular provided a sudden burst of financial support for authoritarian states in Russia, Venezuela, Iran and elsewhere in the Middle East, and also a gush of money into several low-income African states. (Saudi exports rose from $70 billion to $280 billion; Nigerian oil exports from $21 billion to $74 billion; America’s bill for Venezuelan oil rose from $15 billion to $45 billion. Overall, energy made up ten percent of world exports in 2000, and over 18 percent in 2008.) With commodity prices now receding, has the flood of money into the Arabian peninsula, Iran, Nigeria, Angola and the Andes been used to upgrade roads, telecommunications and schools? Or mostly to buy fighter-aircraft, tall buildings, desert ski resorts and palm-tree-shaped islands?
Source: Trade Fact of the Week
It really may happen-Africa
East Africa’s common market
The region’s leaders take another step towards building a common market
FREE-TRADE fingers crossed, some time this summer goods should start being sold without tariffs across borders within the five countries of the East African Community (EAC). The new common market will take in 130m-plus people in Burundi, Kenya, Rwanda, Tanzania and Uganda. The next step is monetary union, with political federation a far remoter prospect. The agreement signed last year at the EAC’s headquarters in the Tanzanian city of Arusha was a first step. Optimists say the EAC should join free-trade blocks in southern and western Africa before 2030. The EAC is working off a small base. Its combined GDP of $75 billion is a sixth of Belgium’s. But scrapping tariffs should boost regional trade and improve competitiveness. The EAC should be better placed to trade with Congo, Ethiopia and Sudan. And if it can build its own wider manufacturing base, its goods may start to compete with cheap stuff from China.
Kenya, which has the region’s strongest manufacturers, retailers and banks, is sure to gain most. But for the EAC to succeed, others must win too. Rwanda and Burundi should benefit from cheaper and quicker transport of goods to and from the ports of Mombasa and Dar es Salaam. Uganda is well placed to expand its agriculture for export.
Tanzania is less certain to gain. It wants to keep some taxes on goods from Kenya. And it is wary of the free movement of labour, fearing that, in many professions, pushier and better-educated Kenyans will come and snatch plum jobs.
Faustin Mbundu, a Rwandan who chairs the East African Business Council, says the real benefits of the common market will accrue only with more and better roads, railways and power stations. Some say a new capital for the EAC must be built from scratch, perhaps on a shore of Lake Victoria, with a new international airport to match Nairobi’s.
But simpler things will be needed a lot sooner. For instance, border crossings will have to be kept open at night. Mr Mbundu wants to end the scourge of informal police checkpoints. Above all, the governments will have to avoid policy reversals that pander to their own industries, a tendency that has hitherto stood in the way of a proper common market.
Source: From The Economist print edition
