Briefings Archives

Fostering an inclusive digital transformation in Cambodia Summary Briefing

The Royal Government of Cambodia is developing a long-term strategic framework to support a digital economy. This centres on the following areas: digital infrastructure; digital human resources including technical, cognitive and soft skills; business ecosystems; e-government; and digital trustworthiness.
Cambodia’s digital transformation is gathering pace and can help Cambodia recover from the downturn. However, our analysis suggests there are different impacts and prospects among different groups and sectors. Managing the differential impacts of digitalisation will be crucial to maintain inclusiveness along the digital transformation path.
Cambodia should enhance the inclusiveness of its digital transformation by: (i) radically transforming innovation in the manufacturing sector; (ii) providing skills for the future; (iii) nurturing the digital start-up economy for an inclusive economy; (iv) protecting and enabling the most vulnerable groups; v) promoting a public sector that leads by example.

ODI and CDRI, July 2020

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Cambodia has advanced significantly towards the digital economy. The Royal Government of Cambodia (RGC) is developing a long-term strategic framework to support it. This move towards a digital economy cannot come soon enough for Cambodia. The current corona virus outbreak, threats to withdraw trade preferences, and a ban on online gambling have laid bare the fragility of Cambodia’s development success. Over the past few months, construction and gambling activities have tumbled, tourism has fallen sharply, and Cambodia’s garments face $100 million of additional duties in the EU after withdrawal of trade preferences in August 2020. Cambodia is looking for a broader base to transform and recover in an inclusive way from the coronavirus crisis.

Digital transformation is a promising area, but it does not automatically support all members of society to the same extent. Complementary measures that include skills development are critical to make digital transformation inclusive. This briefing discusses Cambodia’s digital profile and policies and examples of the current and expected distributional impacts of its digital transformation; and proposes a range of policy areas to enhance a more inclusive transformation.

Photo: Use of information technology and communications to promote digital transformation. Simone D. McCourti/ World Bank . Licence: (CC BY-NC-ND 2.0)

Using Data to Assess the Contribution of Development Finance Institutions to Economic Transformation

Alberto Lemma, October 2018

Recent studies have analysed the investment activities of development finance institutions (DFIs), attempting to understand if these are, or could be, contributing to economic transformation. DFIs frequently report their portfolio activities, including the sectoral composition, and employment and gross value added (GVA) data can be used to compute sectoral productivity level at sector level and over time. When combined, such data help us understand if DFI investments are targeting sectors that have higher productivity or activities to increase productivity levels within a sector.

Alberto Lemma, October 2018

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The data used for this analysis can be found here (link to PDF) on the SET data portal.

Photo: Ethiopia, 2008. Antony Robbins. License: CC BY-NC 2.0.

Kick-Starting Economic Transformation in Rwanda: Four Policy Lessons and their Implications

David Booth, Linda Calabrese and Frederick Golooba-Mutebi, June 2018

Rwanda has committed itself to economic transformation as a pillar of the current seven-year government programme, the National Strategy for Transformation (NSTP1, 2017-24). Whether the country succeeds in this endeavour will depend in good part on whether it learns a small set of key policy lessons from international experience in economic transformation. This briefing sets out four such lessons, drawing on the most distinguished global thinking on the subject, as well as past research on Rwanda by the SET programme.

David Booth, Linda Calabrese and Frederick Golooba-Mutebi, June 2018

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This briefing sets out four such lessons, drawing on the most distinguished global thinking on the subject, as well as past research on Rwanda by the SET programme:

(i) Specialising wisely

(ii) Clustering and concentrating

(iii) Coordinating foreign and domestic capabilities

(iv) Organising for steering and learning.

Photo credit: Sarah Farhat/World Bank. Licence: CC BY-NC-ND 2.0.

Coordinating Public and Private Action for Export Manufacturing: International Experience and Issues for Rwanda

David Booth, Linda Calabrese and Frederick Golooba-Mutebi, July 2017

One of the keys to economic transformation across Africa today is a greater role for employment-intensive, export-oriented manufacturing. After taking due account of differences in contexts and time periods, international experience – especially in Asia but also in Africa-region leaders such as Mauritius – points to employment-intensive manufacturing as a crucial and indispensable step in the transition from poverty to development.

David Booth, Linda Calabrese and Frederick Golooba-Mutebi, July 2017

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Rwanda is – along with Ethiopia – exceptional in Africa in that it has in place a nation-building project centred on the aim of economic transformation. Features of its political economy also mean Rwanda lends itself easily to comparison with the best-documented experiences in Asia. This paper explores the ways in which international experience of success in manufacturing-based economic transformation can provide valuable insight for Rwanda, in the areas of government coordination, engagement with and representation of the private sector, and the experimental learning process.

Photo credit: UNIDO, 2016 via Flickr

Financing Manufacturing in Rwanda

Linda Calabrese, Phyllis Papadavid and Judith Tyson, June 2017

Rwanda is one of Africa’s “rising stars”. The country’s economy has seen solid rates of economic growth since the civil conflict in the mid-1990s. Strength in investment flows has followed in the path of this macroeconomic and institutional stability. As this paper highlights, a large part of Rwanda’s success has been the result of proactive policies undertaken by the government of Rwanda in facilitating a good domestic investment climate, which have been conducive to strong rates of growth in FDI into the economy.

Linda Calabrese, Phyllis Papadavid and Judith Tyson, June 2017

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Rwanda is one of Africa’s “rising stars”. The country’s economy has seen solid rates of economic growth since the civil conflict in the mid-1990s. Strength in investment flows has followed in the path of this macroeconomic and institutional stability. As this report highlights, a large part of Rwanda’s success has been the result of proactive policies undertaken by the government of Rwanda in facilitating a good domestic investment climate, which have been conducive to strong rates of growth in foreign direct investment (FDI) into the economy.

Despite the country’s successes, though, developments in manufacturing have not been as encouraging: the sector’s share of the economy and exports is still small. The report aims to analyse Rwanda’s financial backdrop, and the composition of its investment flows into manufacturing, with a view to exploring constraints and opportunities in manufacturing.

In analysing financial and economic challenges, this paper concludes that high transport and utility costs, the elevated real effective exchange rate and weakness in bank lending are key challenges to be tackled. Looking ahead, special economic zones should continue to be a focus alongside export-oriented investments; prudential measures could target manufacturing finance and disincentivise overly high levels of real estate lending

Photo credit: A’Melody Lee / World Bank (Flickr)

Supporting Economic Transformation: Briefing Papers

Margaret McMillan, John Page, David Booth and Dirk Willem te Velde, March 2017

Launched alongside Supporting Economic Transformation: An Approach Paper, these briefings summarise the central tenets of SET’s approach to the challenge of promoting economic transformation and explore its importance for driving sustainable, inclusive development in the world’s poorest countries.

Margaret McMillan, John Page, David Booth and Dirk Willem te Velde, March 2017

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As continuous and sometimes remarkably fast economic growth has become more usual in much of the developing world over recent decades, attention has shifted to the pattern and quality of that growth. Issues of concern include the persistence of extreme poverty in many countries, despite growth in gross domestic product, and the weak capacity of many sectors to produce sustained increases in employment. Much of recent growth in sub-Saharan African economies has been due to factors like buoyant urbanisation, and an expansion in the service economy that serves only the middle- and upper-classes. This pattern of growth is both highly skewed and non-inclusive. Another way to express this is that these economies are achieving growth without depth, or economic growth without economic transformation.

Photo credit: ILO/Sarah-Jane Saltmarsh, 2010

Foreign Direct Investment and Economic Transformation in Myanmar

Stephen Gelb, Linda Calabrese and Xiaoyang Tang, March 2017, June 2017

The paper and briefing reviews the foreign (Chinese) presence in four sectors in Myanmar and its impact on economic transformation. Significant positive effects include employment and exports in garments, local enterprise development and downstream user costs in construction (and infrastructure), and exports, technology transfer and product market competition in agriculture and agro-processing and finally makes a number of policy recommendations for UK DFID.

Stephen Gelb, Linda Calabrese and Xiaoyang Tang, March 2017

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Stephen Gelb and Linda Calabrese, June 2017

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This study assesses the potential for foreign direct investment (FDI) to contribute to Myanmar’s economic transformation, by raising productivity and growth. The study focuses on four sectors – agriculture and agro-processing, garments, construction and tourism – selected for their significance for both transformation and FDI in Myanmar, particularly FDI from China.

The paper begins with a brief review demonstrating that economic transformation over the past two decades has been limited, though data limitations make it difficult to reach firm conclusions. Following this, a review of trade and investment looks at overall performance, as well as in the four selected sectors, and at relations with China. Exports have grown especially into China, but are dominated by extractives (particularly natural gas and precious stones). Garment export potential has raised manufacturing FDI since 2012. The trade and investment regimes are still undergoing liberalisation to encourage entry. Forty firms in the selected industries were interviewed, of which 31 were Chinese investors which suggest the Chinese firms are fairly satisfied with their performance in Myanmar, and with the productivity of low-skilled Myanmar labour (adjusted for wages). The Chinese and non-Chinese firms are not very different with respect to their main concerns: the quality of infrastructure (energy and transport particularly) and trade facilitation; the quality of local employees in higher-level managerial and technical positions; the limited breadth of the financial system, including the narrow scope of financial and foreign exchange instruments; and the unpredictability or absence of regulation.

The paper reviews in some detail the foreign presence in each of the four sectors and its impact on economic transformation. Significant positive effects include employment and exports in garments, local enterprise development and downstream user costs in construction (and infrastructure), and exports, technology transfer and product market competition in agriculture and agro-processing. The paper also concludes with a number of policy recommendations for UK DFID.

This study has contributed to a comment on factory jobs for the poor which can be read here.