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Global Economic Prospects and the Developing Countries 2003 : Investing to Unlock Global OpportunitiesStrong cyclical dynamics, together with
 an easing of macroeconomic policies in the United States and
 elsewhere, have boosted large parts of the global economy,
 into the initial phase of a recovery in 2002. Nonetheless,
 the global recovery is fragile, because investment spending
 is insufficient to underpin continuing growth, although
 long-term prospects remain promising. Although global
 competition is creating new opportunities for developing
 countries, harnessing globalization requires reducing
 barriers to competition, using targeted interventions
 carefully, but essentially, supported by sound public
 investments. International agreements on investment, and
 competition policies can provide benefits through
 reciprocity, while agreements on investment policy are
 likely to have strong development effects, only if they deal
 with the big issues facing developing countries.
 Consequently, competition agreements should focus on
 restraints to competition that hurt developing countries:
 policy barriers in markets abroad; private restraints on
 competition; and, trade restraints officially sanctioned.
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Implementation Strategy for Urban Water Supply PolicyThis report deals with the water
 sector in Cambodia, and only mentions sanitation aspects in passing.
 However, it is recognized that the scale of the sanitation
 challenge is similarly daunting to or even larger than the
 water challenge, and that progress in sanitation will be as
 crucial as expanded access to safe water in making a lasting
 impact on poverty incidence, in particular vulnerability to
 waterborne diseases. There are two main constraints to
 broad-based growth in the sector. First is the absence of a
 comprehensive strategy to channel financing into the sector
 and to address weak incentives to raise more own-generated
 funds from user revenues. Second is the capacity of the
 providers to absorb public funding and utilize resources
 efficiently towards expanded access to sustainable services.
 Both of these constraints will have to be addressed in the
 context of the country's overall policy of promoting
 sustainable use of water resources and considering concerns
 of the poor and marginalized in the pursuit of development.
 In the short term, the implementation strategy calls for the
 consolidation of individual investment projects in form of a
 comprehensive medium-term capital investment program (MTEF),
 which will serve as a planning tool for investments by the
 service providers, irrespective of funding source. Over the
 next years, the broader process of decentralization will
 have an impact on public and private providers, notably on
 investment planning decisions and corporate governance of utilities.
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Sovereign Wealth Funds and Long-Term Development Finance : Risks and OpportunitiesSovereign wealth funds represent a large
 and growing pool of savings. An increasing number of these
 funds are owned by natural resource exporting countries and
 have a variety of objectives, including intergenerational
 equity and macroeconomic stabilization. Traditionally, these
 funds have invested in external assets, especially
 securities traded in major markets. But the persistent
 infrastructure financing gap in developing countries has
 motivated some governments to encourage their sovereign
 wealth funds to invest domestically. This paper proposes
 some basic elements of a conceptual framework to create a
 system of checks and balances to help ensure that the
 sovereign wealth funds do not undermine macroeconomic
 management or become a vehicle for politically driven
 "investments." First, the risks and opportunities
 of domestic investment by sovereign wealth funds are
 analyzed. Central issues are the relationship of sovereign
 wealth fund financing to the budget process and to the
 procurement systems of sector ministries, as well as the
 establishment of appropriate benchmarks and safeguards to
 ensure the integrity of investment decisions. The paper
 argues that a well-governed sovereign wealth fund, with a
 sound mandate and professional management and staffing, can
 possibly improve the quality of the public investment
 program. But its mandate should not duplicate that of other
 government institutions with investment mandates, such as
 the budget, the national development bank, the investment
 authority, and state-owned enterprises. Establishing rules
 on the type of investment (for example, commercial and/or
 quasi-commercial) and its modalities (for example, no
 controlling stakes, leveraging private investment) is one
 way to ensure separation between the activities of the
 sovereign wealth fund and those of other institutions. The
 critical issue remains that of limiting the sovereign wealth
 fund's investment scope to that appropriate for a
 wealth fund. If investments that generate quasi-market
 returns are permitted, the size of the home bias should be
 clearly stipulated and these investments should be reported separately.