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Conditions Favorable for Worker-Friendly Trade Reforms

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Solid growth projections across APEC member economies will create space to advance trade and labor policy reforms needed to address potentially disruptive transition challenges for workers, according to a new report from the APEC Policy Support Unit.

The APEC region, which accounts for over half of global trade and about 60 per cent of global GDP, will outpace the rest of the world at 3.9 per cent growth for 2017 and maintain a steady pace at 3.8 per cent growth in 2018, the latest APEC Regional Trends Analysis forecasts. 

It calls these prime conditions for the introduction of improved trade adjustment and social protection schemes to help work forces cope with economic and technological growing pains and structurally ensure the momentum of the region’s economy. 

“The economic outlook in APEC is encouraging but there is much work to do to fight rising inequality that contributes to anti-globalization sentiments in some areas. More people need to feel the benefits of trade-driven growth to sustain economies over the long haul,” explained Dr Denis Hew, Director of the APEC Policy Support Unit

“With economies finding their footing, there is a real opportunity for policymakers to confront the effects of market competition and technological change in ways that could make a lasting difference for employment and income prospects in the region.”

The report underscores the importance of deepening cooperation in APEC to narrow education and skills mismatches between labor and employers, open new economic opportunities and raise productivity in the digital era.

It also points to the value regional partnership can bring in supporting workers marginalized by globalization, including those hurt by shuttered industries and job losses—a realm that has been largely limited to domestic policy development in the past.

“The impact of automation and cost competitiveness on jobs and wages has been more pronounced in the developed world and will increasingly be felt in developing areas too as their income and innovation levels continue to rise,” said Emmanuel San Andres, an Analyst with the APEC Policy Support Unit Analyst and the report’s lead researcher.

“Ultimately economies in the APEC region are facing many of the same labor market pressures and the threat they pose to an inclusive recovery. This is a chance for APEC member economies to learn from one another how to optimize trade and growth outcomes at home in this age of disruption,” San Andres continued.

The report recommends greater focus in APEC on the design and implementation of measures such as worker training and re-training, apprenticeship programs, job counselling and social safety nets. It also advocates increased information-sharing on labor trends to help APEC economies refine their policy solutions.

APEC Senior Officials will meet in Port Moresby, Papua New Guinea on 5-6 December to decide how to take this process forward as they flesh out the region’s priorities for policy collaboration in 2018.

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ADB Project to Improve Fiscal Management, Develop Capital Markets in Armenia

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The Asian Development Bank (ADB) has approved a $40 million-equivalent policy-based loan attached to reforms that help strengthen fiscal sustainability and develop the financial and capital markets in Armenia. These are crucial enablers of private sector development.

Armenia’s economic growth over the last few years has been hampered by low levels of investment, both foreign and domestic, given the high costs of local currency finance and related constraints in the financial system. Efficiency-promoting upgrades in public investment and fiscal management are also needed to ensure sustained improvements in fiscal outlook and sovereign risk pricing.

“Financial markets remain nascent in Armenia, which limits the development of the country’s private sector and the banking industry,” said ADB Senior Financial Sector Economist for Central and West Asia Mr. João Farinha Fernandes. “This also constrains public finance and fiscal management, while exposing the economy to financial stability risks. ADB’s assistance is intended to help ensure that Armenia develops a conducive fiscal and financial intermediation environment where private sector players, both big and small, can contribute to growth and development.”

ADB approved a $50 million policy-based loan in November 2018 as part of an ongoing programmatic engagement on financial reforms to strengthen public debt and fiscal risk management, and to develop financial markets in Armenia.

The Second Public Efficiency and Financial Markets Program continues these reforms by strengthening the effectiveness of the government’s fiscal risk management function; promoting the development of fiscally responsible public–private partnerships; and enhancing market transparency and predictability in public debt management. The program will also improve the infrastructure of the government securities market and money market infrastructure, enhancing the sustainability and resilience of Armenia’s finance sector.

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Bangladesh Can Boost its Exports with Better Logistics

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To meet the needs of its growing economy and to boost export growth, Bangladesh needs to improve its transport and logistics systems, says a new World Bank report launched today. 

The report Moving Forward: Connectivity and Logistics to Sustain Bangladesh’s Success, finds that by making logistics more efficient, Bangladesh can significantly boost export growth, maintain its position as a leading ready-made-garments and textile producer, and create more jobs. The report notes that congestion on roads and in seaports, high logistics costs, inadequate infrastructure, distorted logistics service markets, and fragmented governance hamper manufacturing and freight, further eroding Bangladesh’s competitive edge and putting its robust growth path at risk. 

“Bangladesh’s congested transportation and often unsophisticated logistics systems impose high costs to the economy,” said Mercy Tembon, World Bank Country Director for Bangladesh and Bhutan. “By making its logistics more efficient, Bangladesh can significantly optimize its connectivity, business environment, and competitiveness, putting the country on the right path to become a dynamic upper-middle-income country.”

Efficient logistics, the report argues, has become one of the main drivers for global trade competitiveness and export growth and diversification. For Bangladesh, improving its logistics performance provides an opportunity to increase its world market share in garments and textiles, which account for 84 percent of its total exports, expand into new markets, and diversify its manufacturing and agriculture into high-value products. 

The report notes that improving Bangladesh’s logistics requires a system-wide approach based on greater coordination among all public institutions involved in logistics and with the private sector, increasing the effective capacity of core infrastructure, and removing distortions in logistics service markets to reduce costs and improve quality. At a regional level, harmonizing its logistics systems and aligning its customs with that of its neighbors could turn Bangladesh into an important node for regional freight flows and further boost its trade. 

“There’s no doubt that reforms and investments for better transport and logistics will yield Bangladesh substantial economic benefits and strengthen its competitive advantage,” said Matías Herrera Dappe, Senior Economist at the World Bank and author of the report. “But the solution to logistics is not just to invest more but to invest better, by focusing on the service gap, and creating the incentives for high quality and competitive logistics services.”

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New development models to drive growth and employment for youth in Africa

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The United Nations Environment Programme (UNEP) today launched the Global Environment Outlook-6 (GEO-6) for Youth in Africa report on the margins of the 17th session of the African Ministerial Conference on the Environment (AMCEN).

The report analyses the economic opportunities that Africa’s natural resources can provide for job creation and sustainable development. It also provides a package of solutions to tackle Africa’s youth unemployment through the Green Economy.

“This Publication is anchored substantively in the UNEP’s sixth Global Environment Outlook (GEO-6) Regional Assessment for Africa,” said Juliette Biao Koudenoukpo, Director of UNEP’s Regional Office for Africa. “This Assessment has a very clear message; Africa has an opportunity to use its large young population to drive its growth.”

Africa’s youth remains the most hit by unemployment. One-third of Africa’s 420 million youth aged 15 to 35 are unemployed. Of these, 35 per cent are vulnerably employed and 19 per cent are inactive. These numbers will increase dramatically unless urgent actions are not taken.

The report recommends that Africa’s natural capital should be managed sustainably to enhance the livelihoods of African young population, create more sustainable and decent jobs as well as increase social and economic cohesion.

“The Green Economy calls for a paradigm shift in the way that we produce and consume. If young people are the centre of such a shift, they will secure a sustainable future replete with sustainable livelihoods,” said Professor Lee White, Minister for Environment, Forest and Oceans of Gabon and outgoing President of AMCEN. “The Global Environment Outlook-6 for Youth, Africa: A Wealth of Green Opportunities digs deep into that future and shows young people how they can secure their livelihoods through green jobs.”

Natural resources remain a key source of employment in Africa. Eight out of ten people’s employment on the continent are supported by natural resources. Nearly six million Africans are employed in the fisheries and aquaculture sector, ten million people work in the wildlife sector and an average of 54 per cent in the agricultural sector.

The report includes case studies and success stories on African youth who have invested in natural resources to develop entrepreneurship, improve their knowledge and skills as well as create jobs and sustain their livelihoods.

The report calls on governments to encourage youth to invest in green economy through creating platforms for innovation in sustainable development. While confirming the potential of youth in leading green growth in Africa, the report strongly establishes the correlation between green economy and decent jobs.

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