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Migration is a development challenge. About 184 million people—2.3 percent of the world's population—live outside of their country of nationality. Almost half of them are in low- and middle-income countries. But what lies ahead? As the world struggles to cope with global economic imbalances, diverging demographic trends, and climate change, migration will become a necessity in the decades to come for countries at all levels of income. If managed well, migration can be a force for prosperity and can help achieve the United Nations'Sustainable Development Goals. World Development Report 2023 proposes an innovative approach to maximize the development impacts of cross-border movements on both destination and origin countries and on migrants and refugees themselves. The framework it offers, drawn from labor economics and international law, rests on a “Match and Motive Matrix” that focuses on two factors: how closely migrants'skills and attributes match the needs of destination countries and what motives underlie their movements. This approach enables policy makers to distinguish between different types of movements and to design migration policies for each. International cooperation will be critical to the effective management of migration.

Many of the main problems facing developing countries today and tomorrow--growth, poverty reduction, inequality, food insecurity, job creation, recovery from the COVID-19 pandemic, and adjustment to climate change--hinge on adopting better technology, a key driver of economic development. Access to technology is not enough: firms have to adopt it. Yet it is precisely the uptake of technology that is lagging in many firms in developing countries.Bridging the Technological Divide: Technology Adoption by Firms in Developing Countries helps open the “black box” of technology adoption by firms. The seventh volume in the World Bank Productivity Project series, it will further both research and policy that can be used to support technology adoption by firms in developing countries.

Place matters for productivity and prosperity. Myriad factors support a successful place, including not only the hard infrastructure such as roads, but also the softer elements such as worker skills, entrepreneurial ability, and well-functioning institutions. History suggests that prosperous places tend to persist, while “left-behind” regions—or those hurt by climatic, technological, or commercial shocks—struggle to catch up. This division gives rise to demands to “do something” about the subsequent spatial inequality. Such pressures often result in costly spatially targeted policies with disappointing outcomes because of a lack of analysis of the underlying barriers to growth and structural transformation and a fair appraisal of the possibility of overcoming them.The latest volume of the World Bank Productivity Project series, Place, Productivity, and Prosperity: Revisiting Spatially Targeted Policies for Regional Development makes three broad contributions. First, it provides new analytical and empirical insights into the three drivers of economic geography—agglomeration economies, migration, and distance—and the way in which these drivers interact. Second, it argues that these forces are playing out differently in developing countries than they have in advanced economies: urbanization is not accompanied by structural transformation, leaving cities crowded and accruing all the negative aspects of urbanization without being concentrated productively. Long-term amelioration of poverty in lagging regions requires advancing the overall national agenda of structural change and productivity growth. Third, it provides a heuristic framework with which to inform policy makers'assessments of place-based policy proposals, helping them identify the regions where policy is likely to have an impact and those that would remain nonviable. The framework enables governments to clarify the implications of various policy options; to think critically about design priorities, including necessary complementary policies; and to navigate the implementation challenges.“This is an extremely welcome book. Three experts lay out the principles behind spatially targeted policy and the experience of countries using such policies. A must-read for anyone interested in spatial inequality and policy to address it.”Anthony J. VenablesProfessor of Economics, University of Manchester, and Research Director, The Productivity Institute“Delivering better livelihoods for all requires tapping into the economic potential of every place, including those losing out or lagging behind. This, however, cannot be done effectively without a sound theoretical and empirical framework. Place, Productivity, and Prosperity is the right book to look for such a framework.”Andrés Rodríguez-PosePrincesa de Asturias Chair and Professor of Economic Geography, London School of Economics

After a half century of transformative economic progress that moved hundreds of millions of people out of poverty, countries in developing East Asia are facing an array of challenges to their future development. Slowed productivity growth, increased fragility of the global trading system,and rapid changes in technology are all threatening export-oriented, labor-intensive manufacturing—the region's engine of growth. Significant global challenges—such as climate change and the COVID-19 pandemic—are exacerbating economic vulnerability. These developments raise questions about whether the region's past model of development can continue to deliver rapid growth and poverty reduction.Against this background, The Innovation Imperative in Developing East Asia aims to deepen understanding of the role of innovation in future development. The report examines the state of innovation in the region and analyzes the main constraints that firms and countries face to innovating. It assesses current policies and institutions, and lays out an agenda for action to spur more innovation-led growth.A key finding of the report is that countries'current innovation policies are not aligned with their capabilities and needs. Policies need to strengthen the capacity of firms to innovate and support technological diffusion rather than just invention. Policy makers also need to eliminate policy biases against innovation in services, a sector that is growing in economic importance. Moreover, countries need to strengthen key complementary factors for innovation, including firms'managerial quality, workers'skills, and finance for innovation.Countries in developing East Asia would also do well to deepen their tradition of international openness, which could foster openness in other parts of the world. Doing so would help sustain the flows of ideas, trade, investment, and people that facilitate the creation and diffusion of knowledge for innovation.

Industrialization drives the sustained growth in jobs and productivity that marks the developmental take-off of most developed economies. Yet, academics and policy makers have questioned the role of manufacturing in development for late industrializers, especially in view of rapid advancements in technologies and restructuring of international trade. Concurrently, industrialization and structural transformation are integral to the African Union's Agenda 2063 and the development strategies of several countries in Sub-Saharan Africa (SSA). Given this renewed interest in industrialization across the region, a central question is not whether SSA countries should pursue industrialization as a potential path tosustainable growth but how to promote the prospects of industrialization. Industrialization in Sub-Saharan Africa: Seizing Opportunities in Global Value Chains addresses this question by reassessing the prospects for industrialization in SSA countries through integration into global value chains. It also examines the role of policy in enhancing these prospects. The main findings indicate that • SSA has not experienced premature deindustrialization; the region has witnessed substantial growth in manufacturing jobs despite a lack of improvement in the contribution of manufacturing value-added to GDP. • The region's integration into manufacturing global value chains is reasonably high but it is dominated by exports of primary products and engagement in low-skill tasks.• Global value chain integration has led to job growth, and backward integration is associated with more job creation.The report emphasizes the role of policy in maintaining a competitive market environment, promoting productivity growth, and investing in skills development and enabling sectors such as infrastructure and finance. Policy makers can strengthen the global value chain linkages by (1) increasing the value-added content of current exports, (2) upgrading into high-skill tasks, and (3) creating comparative advantages in knowledge-intensive industries.

Manufacturing-led development has provided the traditional model for creating jobs and prosperity. But in the past three decades the conventional pattern of structural transformation has changed, with the services sector growing faster than the manufacturing sector. This raises critical questions about the ability of developing economies to close productivity gaps with advanced economies and to create good jobs for more people. At Your Service? The Promise of Services-Led Development (www.worldbank.org/services-led-development) assesses the scope of a services-driven development model and policy directions that can maximize the model's potential.

Trade is a well-established driver of growth and poverty reduction.But changes in trade policy also have distributional impacts that create winners and losers. It is vital to understand and clearly communicate how trade affects economic well-being across all segments of the population, as well as how policies can more effectively ensure that the gains from trade are distributed more widely. The Distributional Impacts of Trade: Empirical Innovations, Analytical Tools, and Policy Responses provides a deeper understanding of the distributional effects of trade across regions, industries, and demographic groups within countries over time. It includes an overview (chapter 1); a review of innovations in empirical and theoretical work covering the impacts of trade at the subnational level (chapter 2); highlights from empirical case studies on Bangladesh, Brazil, Mexico, South Africa, and Sri Lanka (chapter 3); and a policy agenda to improve distributional outcomes from trade (chapter 4). This book comes at a time when the shock from COVID-19 (coronavirus) adds to an already uncertain trade policy environment in which the value of the multilateral trading system has been under increased scrutiny. A better understanding of how trade affects distributional outcomes can lead to more inclusive policies and support the ability of countries to maximize broad-based benefits from trade.

Global value chains (GVCs) powered the rapid expansion of international trade after 1990. Countries import not only for domestic consumption, but also to export, and transactions typically involve long-term, firm-to-firm relationships rather than anonymous spot market transactions. Trade and the rise of GVCs enabled an unprecedented convergence: poor countries grew faster and began to catch up with richer countries. More than 1 billion people escaped poverty as a result. Since the Great Recession, the growth of trade has been sluggish and the expansion of GVCs has slowed down. At the same time, potentially serious threats have emerged to the model of labor-intensive, trade-led growth. New labor-saving technologies could draw production closer to the consumer and reduce demand for labor. And trade conflict among large countries could lead to a retrenchment of supply chains or a segmentation of GVCs. The World Development Report (WDR) 2020: Trading for Development in the Age of Global Value Chains examines whether there is still a path to development through GVCs. It concludes that technological change is at this stage more a boon than a curse. GVCs can continue to boost growth, create better jobs, and reduce poverty, provided that developing countries implement deeper reforms and industrial countries pursue open, predictable policies.

China proposed the Belt and Road Initiative in 2013 to improve connectivity and cooperation on a transcontinental scale. This study, by a team of World Bank Group economists led by Michele Ruta, analyzes the economics of the initiative. It assesses the connectivity gaps between economies along the initiative's corridors, examines the costs and economic effects of the infrastructure improvements proposed under the initiative, and identifies complementary policy reforms and institutions that will support welfare maximization and mitigation of risks for participating economies.

Remarkably, a small fraction of firms account for most of the job and output creation in high-income and developing countries alike. Does this imply that the path to enabling more economic dynamism lies in selectively targeting high-potential firms? Or would pursuing broad-based reforms that minimize distortions be more effective? Inspired by these questions, this book presents new evidence on the incidence, characteristics, and drivers of high-growth firms based on in-depth studies of firm dynamics in Brazil, Côte d'Ivoire, Ethiopia, Hungary, India, Indonesia, Mexico, South Africa, Thailand, Tunisia, and Turkey. Its findings reveal that high-growth firms are not only powerful engines of job and output growth but also create positive spillovers for other businesses along the value chain. At the same time, the book debunks several myths about policies to support firm dynamism that focus on outward characteristics, such as firm size, sector, location, or past performance. Its findings show that most firms struggle to sustain rapid rates of expansion and that the relationship between high growth and productivity is often weak. Consequently, the book calls for a shift toward policies that improve the quality of firm growth by supporting innovation, managerial skills, and firms'ability to leverage global linkages and agglomeration. To help policy makers structure policies that support firm growth, the book proposes a new ABC framework of growth entrepreneurship: improving Allocative efficiency, encouraging Business-to-business spillovers, and strengthening firm Capabilities. This book is the third volume of the World Bank Productivity Project, which seeks to bring frontier thinking on the measurement and determinants of productivity to global policy makers.'Policy makers often get carried away by the disproportionate contributions of high-growth firms to job and output growth and commit to pursuing policies targeting the potential ‘stars.'This book separates fact from fiction underpinning such interventions through a comprehensive analysis of high-growth firms across a range of developing countries, making a compelling argument that public policy to pick prospective winners is neither possible nor desirable. Policy makers would be wise to consult its arguments and policy advice when designing the next generation of policies to support the growth of firms.'William R. Kerr Professor of Business Administration, Harvard University; author of The Gift of Global Talent: How Migration Shapes Business, Economy and Society'How to ignite and sustain high firm growth has eluded both economic analysis and thought leaders in policy and business. Through its meticulous and thoughtful analysis, this important new book provides a tractable framework to guide policy to harness the growth and productivity potential of firms in the developing-country context.'David AudretschDistinguished Professor and Director of the Institute for Development Strategies, Indiana University.

With more than 70 percent of its population living in cities, Latin America and the Caribbean (LAC) is among the most urbanized regions in the world. Yet, although its cities are, on average, more productive than those elsewhere in the world, their productivity lags that of North American and Western European cities. Closing this gap provides LAC with the opportunity to raise living standards and join the ranks of the world's richest countries.Raising the Bar: Cities and Productivity in Latin America and the Caribbean is about the productivity of cities in LAC and the factors that help to explain its determination. Based on original empirical research, the report documents the high levels of population density and other features of LAC cities that mark them out from those in the rest of the world. The report also studies the role of three key factors – urban form, skills, and access to markets – in determining the productivity of LAC cities. It shows that while excessive congestion forces and inadequate metropolitan coordination seem to be stifling the benefits of agglomeration, LAC cities benefit from strong human capital externalities. It also finds that, within individual LAC countries, cities are poorly integrated with one another, which contributes to large differences in performance across cities and undermines their aggregate contribution to productivity at the national level.

While other emerging regions have been thriving, the Middle East and North Africa (MENA) region'saggregate export performance over the past two decades has been consistently weak. Using detailedfirm-level export data from Customs administrations, Champions Wanted explains why. One central finding ofthe book is that the size distribution of MENA's exporting firms is suggestive of a critical weakness at the top.With the exception of the top firm, MENA's elite exporters are smaller and weaker compared to their peers inother regions. The largest exporter is alone at the top—Zidane without a team.MENA countries have failed to nurture a group of export champions, which critically contribute to exportsuccess in other regions. Part of the reason behind this weak export performance is the lack of a competitivereal exchange rate. The deleterious effects of an uncompetitive currency can be traced all the way down tothe firm level, hurting expansion at the intensive and extensive margins and preventing the emergence ofexport takeoffs. The lack of heavyweight exporters at the top of the distribution also reflects the region'sfailure to push for trade and business climate reforms energetically.Finally, the region's prevalent cronyism and corruption under pre–Arab Spring regimes (at least) confirmsthat business-government ties have led to distortionary allocation of favors and rent dissipation bybeneficiary firms, with little evidence that those firms have developed into national champions or helped liftthe region's export performance. The possibility of state capture in itself should call for caution whenadvocating any form of government intervention. In contrast, some interventions, such as export promotionprograms, show some effects on smaller exporters. However, because these firms are marginal in trade, suchprograms cannot be game changers. More broadly, the success of MENA countries in promoting exportgrowth and diversification, as well as generating jobs, depends heavily on their ability to create anenvironment where large firms can invest and expand exports and new, efficient firms can rise to the top.This book offers some policy leads on how to achieve this goal.

The world economy is not what it used to be twenty years ago. For most of the 20th century, the world economy was characterized by developed (North) countries acting as'center'to a'periphery'of developing (South) countries. However, the recent rise of developing economies suggests the need to go beyond this North-South dichotomy.This tectonic re-configuration of the global landscape has brought about significant changes to countries in the Latin America and Caribean (LAC) region. The time is ripe for an in-depth analysis of the dynamics and nature of LAC's external connections.This latest volume in the World Bank Latin American and Caribbean Studies series will focus on the implications of these trends for the economic development of LAC countries. In particular, trade, financial, macroeconomic, and sectoral shifts, as well as labor-market aspects will be systematically analyzed.

The past two decades have seen exciting changes with developing countries emerging as exporters of services. Technological developments now make it easier to trade services across borders. But other avenues are being exploited: tourists visit not just to sightsee but also to be treated and educated, service providers move abroad under innovative new schemes, and some developing countries defy traditional notions by investing abroad in services.'Exporting Services: A Developing Country Perspective'takes a brave approach, combining exploratory econometric analysis with detailed case studies of representative countries: Brazil, Chile, the Arab Republic of Egypt, India, Kenya, Malaysia, and the Philippines. Two questions lead the analysis: How did these developing countries succeed in exporting services? What policy mix was successful and what strategies did not deliver the expected results? The analysis evaluates the role of three sets of factors: First, the fundamentals, which include a country's factor endowments, infrastructure, and institutional quality; second, policies affecting trade, investment, and labor mobility in services; and third, proactive policies in services designed to promote exports or investment. The case studies illustrate the complex nature of reforms and policy making in the service sector as well as the benefits of well-implemented reforms. Although success seems to be explained by a set of conditions that are difficult to replicate, common features can also be identified. Several countries have adopted policies to support exports, especially exports of information technology–related services. This resource will be valuable for policy makers, experts, and academics who are engaged in efforts to reform service and investment policies in their own country.