We are in our fourth installment of the Development Digest, a semi-annual publication showcasing the work arising from the Hub, to share the Malaysian development experience and the research outputs from the Global Research teams.
- Leveraging Knowledge for Development Finance
The World Bank Group Global Knowledge and Research Hub in Malaysia opened on March 28, 2016. Two years in, the Hub continues to pursue its path of sharing Malaysia’s people-centered development expertise, and creating new innovative policy research on local, regional, and global issues. Otaviano Canuto, Executive Director at the Executive Board of Directors of the World Bank Group and its Affiliates reflects on this journey, and what it means for the institution.
- Expanding Opportunities for the Poor
Better jobs, higher salaries, and improved access to basic services – the bright lights of cities seem to promise these and more. But for millions lured to these centers for innovation and prosperity, cities can also lead to a life of squalor. Access to safe drinking water or sanitation may be poor or non-existent. Makeshift homes may flood every time it rains. Keeping families fed may become a daily struggle.
- Riding the Wave: An East Asian Miracle for the 21st Century
Developing East Asia and Pacific (EAP) has seen a dramatic reduction in poverty, thanks to rapid and broadly-shared growth over the past quarter century. However, disparities of income and wealth are becoming more apparent, while uncertain growth prospects, aging populations and rapid urbanization pose new challenges. Countries in the region now need to reconsider their policies to achieve inclusive growth – one that eliminates poverty, and promotes upward mobility and economic security for all. Policy makers will need to design and implement a selective set of interventions that are customized to their country’s circumstances, and the needs and aspirations of the different segments of their populations.
Caterina Ruggeri Laderchi and Sudhir Shetty
- Turmoil to Transformation: 20 Years after the Asian Financial Crisis
The Asian Financial Crisis (AFC), which spread through Southeast Asia 20 years ago, resulted in severe economic stress across the affected countries, including Malaysia. However, policymakers across the region learned many important lessons from the experience of the AFC, and adopted reforms that laid the foundations for a much more resilient Southeast Asia of today. Deep macro-financial reforms in Malaysia began with the National Economic Recovery Plan. This included measures to restore market confidence, restructure corporate debt, recapitalize the banking sector, and stimulate the economy through countercyclical fiscal and monetary policies. Dealing with the AFC, and subsequently implementing financial sector reforms, has since transformed Malaysia’s financial sector into one that is sound, resilient, and diversified.
- A New Role for Development Banks?
There is widespread consensus that not all firms and individuals have good access to financial services. Problems of access to finance can arise from both principal-agent problems and transaction costs. Traditionally, the role of governments in enhancing access to finance has fallen into one of the two opposing views. The interventionist view argues that governments should directly intervene in the financial sector. In contrast, the laissez-faire view argues that the role of governments should only be restricted to improving the enabling environment. Recently, a third view incorporating elements of both approaches has emerged. The promarket activism view argues that, while governments should mainly focus on improving the enabling environment, direct intervention might be warranted to address market failures.
Sergio L. Schmukler
- Enhancing Public Sector Performance: Malaysia’s Experience with Transforming Land Administration
Land policies and land administration services are key for good governance. However, much of the world’s population lack access to affordable land administration systems to secure their property rights. In Malaysia, the institutional and legal context for land administration spans both Federal and State mandates, as well as multiple institutions and agencies. Malaysia delivers efficient land administration services, which include the introduction of qualified titles, business process re-engineering, the use of information and communications technology (ICT), and public-private partnerships (PPPs).
Katherine Kelm and Jana Kunicova
- Improving Education Sector Performance in Malaysia
In 2009, Malaysia’s education system embarked on a transformation. Although Malaysia reached an adult literacy rate above 90 percent, OECD’s PISA scores provided hard evidence of what many Malaysians already knew: more and more students were graduating, with diplomas certifying they had completed more years of schooling, but the education they received – as reflected in the overall poor mastery of English language skills, critical thinking, and analytical reasoning skills – was not of the quality needed for a country with aspirations of reaching a high-income status.
Jana Kunicova, Jeevakumar Govindasamy and Lars M. Sondergaard
- Learning from Malaysia’s SME Story
Malaysia’s experience in addressing access to finance for SMEs has been successful, serving as a learning point for countries like Tanzania and South Africa. The World Bank Group Global Knowledge and Research Hub played conduit to organize two fruitful visits to promote South-South exchanges on SME development, as part of its outbound knowledge strategy to share and promote the successes and lessons gained from the ‘Malaysia Experience’ with the world.
Djauhari Sitorus and Simon Bell
- Financial Development, Growth, and Crisis: Is There a Trade-Off?
Financial deepening leads to a trade-off between higher economic growth and higher crisis risk. However, for middleincome countries at least, the positive growth effects outweigh the negative crisis risk impact. This balanced view has been revisited recently for advanced economies, where there might be a threshold beyond which financial depth becomes detrimental for economic growth by crowding out other productive activities and misallocating resources. Recognizing the intrinsic trade-offs of financial development can provide a useful framework to design policies targeting financial deepening, diversity, and inclusion. It can also highlight the need for complementary policies to mitigate the risks.
Norman Loayza, Amine Ouazad and Romain Ranciere
- Global Trade: Slowdown, Factors, and Policies
Growth in global trade has been slow since 2012. While global trade downturns are not unprecedented, the observed change in the relationship of trade to GDP poses the question whether the trade slowdown is a transitory deviation or a more long-lasting phenomenon brought about by structural changes. This new dynamic, coupled with the rise of protectionist policies and rhetoric in many countries, positions trade at the forefront of policy discussions. This brief reviews recent patterns in global trade, examines the factors affecting trade – distinguishing between transitory and structural components of the slowdown – and discusses policies shaping the path of future trade.
Dorina Georgieva, Norman Loayza and Fabian Mendez-Ramos
- The New ASEAN Green Bonds Standards
Climate change poses a significant threat to the economic development of countries around the world. The World Bank estimates that up to a 100 million poor people could be pushed back into poverty by 2030 as a result of climate change – in part due to a combination of higher agricultural prices and threats to food security and health – especially in the poorer parts of the world. The Paris Agreement and the 2030 Sustainable Development Goals (SDGs) have provided commitments to tackle the most urgent of these environmental challenges.
Ashraf Arshad and José De Luna-Martínez
- Sustainable Development Goals and the Role of Islamic Finance
Islamic finance has the potential to play a crucial role in supporting the implementation of the Sustainable Development Goals (SDGs). In the face of significant financing needs for the SDGs, Islamic finance has untapped potential as a substantial and non-traditional source of financing for the SDGs.
- Women on Boards in Malaysia
Using firm-level data for 806 public-listed companies in Malaysia, we highlight the extent of women’s participation as board members in Malaysia benchmarked against other countries. How this women’s participation varies by industry and firm-size is considered, along with its potential impact on the company’s performance. About 13 percent of the board positions in Malaysia filled by women and the rest by men in 2017. Moreover, the trend over the last four years reveals a slow pace of increase in the proportion of women board members. The largest 100 firms and some industries such as finance show a greater tendency to have female vs. male board members. The profit rate is significantly positively correlated with proportionately more female board members in a firm, suggesting a “business case” for more women on the boards.
Mohammad Amin and Mei Ling Tan