International Monetary Fund. Middle East and Central Asia Dept.
Countries in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region and those in the Caucasus and Central Asia (CCA) responded to the COVID-19 pandemic with swift and stringent measures to mitigate its spread and impact but continue to face an uncertain and difficult environment. Oil exporters were particularly hard hit by a “double-whammy” of the economic impact of lockdowns and the resulting sharp decline in oil demand and prices. Containing the health crisis, cushioning income losses, and expanding social spending remain immediate priorities. However, governments must also begin to lay the groundwork for recovery and rebuilding stronger, including by addressing legacies from the crisis and strengthening inclusion.
Mr. Ralph Chami, Ernst Ekkehard, Connel Fullenkamp, and Anne Oeking
We present cross-country evidence on the impact of remittances on labor market outcomes. Remittances appear to have a strong impact on both labor supply and labor demand in recipient countries. These effects are highly significant and greater in size than those of foreign direct investment or offcial development aid. On the supply side, remittances reduce labor force participation and increase informality of the labor market. In addition, male and female labor supply show significantly different sensitivities to remittances. On the demand side, remittances reduce overall unemployment but benefit mostly lower-wage, lowerproductivity nontradables industries at the expense of high-productivity, high-wage tradables sectors. As a consequence, even though inequality declines as a result of larger remittances, average wage and productivity growth declines, the latter more strongly than the former leading to an increase in the labor income share. In fragile states, in contrast, remittances impose a positive externality, possibly because the tradables sector tends to be underdeveloped. Our findings indicate that reforms to foster inclusive growth need to take into account the role of remittances in order to be successful.
Zidong An, Tayeb Ghazi, Nathalie Gonzalez Prieto, and Mr. Aomar Ibourk
This paper investigates the relationship between economic growth and job creation in developing economies with a focus on low and lower middle-income countries along two dimensions: growth patterns and short-run correlations. Analysis on growth patterns shows that regime changes are quite common in both economic growth and employment growth, yet they are not synchronized with each other. Okun’s Law—the short-run relationship between output and labor market—holds in half of the countries in our sample and shows considerable cross-country heterogeneity.
The National Development Strategy of the Republic of Tajikistan mainly complements future renewals and ensures implementation of the development process of the country. The fields of activity of the world community outlined in the Millennium Declaration comply with the national goals and priorities of Tajikistan. In accordance with the National Development Strategy of the Republic of Tajikistan and Poverty Reduction Strategy for the period of 2010–12, priority areas for further development of complex spheres in separate sectors are unified, which basically covers public administration reform and private sector development.
Mr. Chris Papageorgiou, Hans Weisfeld, Ms. Catherine A Pattillo, Mr. Martin Schindler, Mr. Nikola Spatafora, and Mr. Andrew Berg
This paper investigates the short-run effects of the 2007-09 global financial crisis on growth in (mainly non-fuel exporting) low-income countries (LICs). Four conclusions stand out. First, for many individual LICs, 2009 was not extraordinarily calamitous; however, aggregate LIC output declined sharply because LICs were unusually synchronized. Second, the growth declines are on average well explained by the decline in export demand. Third, if the external environment facing LICs improves as forecast, their growth should rebound sharply. Finally, and contrary to received wisdom, there are few robust relationships between the cross-country growth variation and the policy and structural environment; the main exceptions are reserve coverage and labor-market flexibility.
This is the first issue of IMF Staff Papers published under a special partnership between the IMF and Palgrave Macmillan. Very little will change with regard to the journal's visual appearance, though significant service quality enhancements (e.g., an on-line interactive edition) will rollout before the end of 2007. For more information and regular updates, please access http://www.palgrave-journals.com/imfsp/index.html.
This paper examines Tajikistan’s 2004 Article IV Consultation and Fourth Review Under the Poverty Reduction and Growth Facility. Strengthened fiscal discipline and tighter monetary policy have reduced inflation from 40 percent in 2001 to 5.6 percent in 2004. Strong growth in tax revenues and continued expenditure restraint contributed to small fiscal surpluses during the past two years. Nonetheless, progress in a number of priority reform areas envisaged in the Poverty Reduction Strategy Paper has been slow. In particular, the business environment and public and private sector transparency and governance need to be strengthened further.
This Selected Issues paper analyzes the sources of recent growth in Tajikistan. It concludes that economic growth has been mainly driven by the services sector and a surge in remittances that have been mainly used for private consumption and small-scale private investment. The paper summarizes the recently introduced revisions to the Tax Code, which are an evolutionary step in simplifying the tax system and setting the base for better revenue administration. It also examines the likely impact on households of increasing electricity prices to cost-recovery levels.