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Financing for Development Post-2015This paper is a contribution to United Nation (UN)-led efforts to articulate a post-2015 development framework, building on the Millennium Declaration and Millennium Development Goals (MDGs). It focuses on the challenge of financing development goals and complements the extensive work conducted by the United Nations1 and other institutions, including the World Bank Group. The paper is structured as follows. Section one outlines elements of what it will take to achieve development outcomes, the importance of a global development cooperation framework, the role of targeted, evidence-based policies and sound institutions; and the mobilization of resources for global public goods. Section two focuses on how best to support developing countries in mobilizing domestic resources for development, by boosting taxation capacity, harnessing natural resource revenue, improving expenditure efficiency, and curbing illicit financial flows. Section three examines issues of aid effectiveness and considers ways for development actors to provide better and smarter aid. Section four discusses trends in private financial flows to developing countries and the growing mismatch between available financing and investment needs. It then turns to strategies for mobilizing financing for long-term infrastructure. Finally, section five explores a range of emerging and innovative sources of finance, and the role an inclusive financial system can play to promote development.
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Government Connections and Financial Constraints : Evidence from a Large Representative Sample of Chinese FirmsThis paper examines the role of firms' government connections, defined by government intervention in the appointments of Chief Executive Officers and the status of state ownership, in determining the severity of financial constraints faced by Chinese firms. In line with the previous literature, the paper demonstrates that investment by non-state firms is highly sensitive to internal cash flows, while no such sensitivity is found for government-owned enterprises. Even within the subset of non-state firms, government connections are associated with substantially less severe financial constraints (less reliance on internal cash flows to fund investment). The paper also finds that large non-state firms with weak government connections are especially financially constrained, due perhaps to the formidable hold that their state rivals have on financial resources after the "grabbing-the-big-and-letting-go-the-small" privatization program in China. Firms with government-appointed Chief Executive Officers also have significantly lower investment intensities, due perhaps to their lower-powered incentives. The empirical results suggest that government connections play an important role in explaining Chinese firms' investment behavior and financing conditions, and provide further evidence on the nature of the misallocation of credit by China's dominant state-owned banks.
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Chinese FDI in EthiopiaChinese Foreign Direct Investment (FDI)
 into Africa is on the rise and Ethiopia is at the forefront
 of this trend. On request of the Government, the World Bank
 surveyed 69 Chinese enterprises doing business in Ethiopia
 with a 95-question survey in May/June 2012. The survey
 covered various aspects of the foreign direct investment
 climate in Ethiopia, including infrastructure, sales and
 supplies, land, crime, competition, finance, human
 resources, and questions about general opportunities and
 constraints for doing business in Ethiopia. This report
 summarizes the results of survey and provides policy
 suggestions in light of the analysis; the report also
 provides some broader background of the expected benefits of
 FDI into Ethiopia as well as current policies and approaches
 to promote incoming investment. Addressing identified
 obstacles could help Ethiopia to take better advantage of
 foreign investors in order to accelerate the shift from a
 predominantly low-productivity agriculture-based economy
 towards a higher-productivity manufacturing and export-based
 economy. Experiences in successful countries around the
 world, and especially East Asia show that foreign investment
 is instrumental to facilitate such a structural
 transformation and to maintain sustained and broad-based
 economic development. This study recommends five main areas
 for policy adjustments to facilitate foreign investors
 coming into Ethiopia: adjust customs clearance procedures
 and trade regulations; facilitate currency convertibility
 and increase transparency of the exchange rate policy;
 improve tax administration consistency and efficacy; execute
 impartial labor regulation; and increase the supply and
 quality of skilled workers.