Dakar. From the air, this sprawling city looks like a metropolis on the move, a buzzing quadrilateral jutting into the Atlantic. Cars speed along a supple, newly reconstructed four-lane highway that hugs the rugged coastline. Cranes dot the seaside, building luxury hotels and conference centers, as investors from Dubai revamp the city’s port, hoping to transform it into a high-tech regional hub.
But on the ground the picture shifts. Jobless young men line the new highways, trying to scratch out a living by selling phone cards, cashews and Chinese-made calculators to passers-by. The port is full of imported food that is increasingly out of reach for most Senegalese. Dakar will soon have a glut of five-star hotel rooms, but rising rents have pushed the city’s poor and even middle-class...
Chile has changed its pension system. This is big news, considering how controversial the current system was when it was introduced in the early ‘80s and how vaunted it has become, being emulated around the world.
Earlier Chile had a so-called PAYGO or pay-as-you-go system, in which today’s workers contribute to the system and those contributions are (for the most part) paid out for today’s retirees. One major problem with PAYGO systems is demographic bulges in which more people retire than enter the workforce, creating imbalances in the ratio of persons being “supported” by current workers. Increasing life expectancy exacerbates that problem further. In the individual account system that Chile adopted, workers contribute to their own accounts, investing those contributions...
Pakistan’s outgoing government initiated a study to help draft a comprehensive employment policy for Pakistan. According to the draft report (point 2.2.1), Pakistan’s informal sector has been growing at an unprecedented pace and today 72.9 per cent of the non-agriculture workforce is employed by this sector. In conservative estimates, out of the $140 billion economy, $32 billion plus is in the informal sector, providing a huge opportunity to its businessmen to evade taxes every year. With the 20 per cent plus growth in the informal sector (2003-2006), the issue has become a matter of great concern, and the government is considering a proposal to bring the informal sector in the mainstream through its “decent work” program.
The report emphasizes that despite this growing size,...
Hernando de Soto is famous for his work on reducing the size of the informal sector and paving the way for people to be part of the formal economy and to participate in a democracy. But to us at CIPE he is also known as the first person - literally - who walked through our doors when we opened back in 1984. A program with Hernando’s Institute for Liberty and Democracy in Peru was our very first project. And since that first project he remained a good friend of CIPE, a committed supporter of market reforms and democratic institutions around the world.
De Soto gained a lot of global visibility since we first met him in the 1980s - some may even say he has a celebrity status these days. He advises presidents; he is known worldwide for offering economic solutions to terrorism;...
Angola’s story is one all too common in resource-rich developing countries, where impressive growth figures fail to translate into meaningful improvements of an average person’s life. Instead, a prominent group of well-connected nouveau riche emerges and seizes the reigns of political and economic power in the country. That leaves the rest of the population outside of Braudel’s bell jar, an “invisible structure … that reserved capitalism for a very small sector of society.”
NYT reports that due to the recent oil windfall profits, Angola is seeing an unprecedented rush of grand infrastructure projects: building new roads and railroad tracks, renovating airports, etc. In contract, improvements in the general welfare leave much to be desired.
Angola is gushing oil, pumping...
A couple of weeks ago, thanks to CIPE’s friends at the Institute for Liberty and Democracy (ILD), I was able to visit a very special shopping center in Lima, Peru. The name of the shopping mall is Polvos Azules: it derives its name from the street where a group of informal vendors used to be located. These informal vendors are now the owners of the Polvos Azules shopping center.
In the 1980s, approximately 5,000 street vendors were forced by the city to abandon their business locations and move to the Polvos Azules area. At that time, these poor entrepreneurs were widely considered a nuisance. Hernando De Soto’s organization, ILD, came to the aid of these entrepreneurs, recognizing their desire to make an honest living, improve their lives, and thereby make a productive contribution...
It is not uncommon to hear about extreme government solutions to slums - raze them to the ground. No slums - no problems! But is it really the case?
This CSM commentary takes a closer look at the life in slums in Ghana and argues that governments can help fix some of the problems there, rather than evicting the people to make cities more aesthetically pleasing. Slums, authors argue, are often a breeding ground for entrepreneurial activity and innovation and more needs to be done to channel that potential into broader business development and growth. And solutions cannot come from outside, they must come from within:
With this in mind, the developing world should look less to the United Nations and international experts for solutions to their slum problems. Instead, leaders should...
How many people do you think have a bank account in an average OECD country? Eighty percent? Ninety? I’m not sure what the number is exactly, but one thing I am certain about - its much more than in Uganda, where less than 10% of the population (2.4 million out of 30 million people) has a bank account.
Even though the majority does not participate in the formal finanacial system, this does not mean people don’t try and put away a little money, however.
According to the report, 71% of Ugandans save, with forms ranging from formal to informal methods like under mattresses or keeping money with friends. A high number of those who save (71%) use informal places like a secret place which they couldn’t disclose, while 27% use informal groups and 22% use financial...