Economics & Development

Do politicians pursue reforms when they know that status-quo policies are inefficient? Prior literature has answered this question as dependent upon reelection incentives to pander to uninformed voters. This paper shows that reform failure can arise from political selection, or the intrinsic characteristics of those who pursue leadership positions and careers in politics, even when voters would like governments to pursue efficient policies. First, the paper shows how incrementally changing the environment in pandering models can yield political selection of “status-quo” types rather than “reformers” as the driving force behind reform failures. In stark contrast to prevailing explanations, reelection incentives in this model push politicians toward reforms. Second, however, even when reelection incentives are introduced, “status-quo” types continue to resist reforms because of the reputation value in political markets of sticking to their preferred (inefficient) policy to signal their type. That is, politicians can choose inefficient policies even at the risk of losing elections because of political career concerns after exiting office. The paper thus formalizes the notion of “political will” as intrinsic motivation and political career concerns of different types of politicians. The relevance of the model is illustrated using available case studies and empirical evidence, with forward-looking implications for international development agencies that advocate reforms.

This paper examines how armed conflict affects the global allocation of foreign direct investment using monthly conflict fatality data matched with project-level greenfield foreign direct investment (FDI) and cross-border mergers and acquisitions (M&As) from 2010–2023. The presence of an armed conflict is associated with a decline in the number of greenfield projects (16.5%), FDI associated jobs (15.6%), the number of origin countries (12.4%), and the number of sectors (15.6%). The sensitivity of FDI to conflicts has intensified during 2020–2023, especially so for one-sided violence against civilians. Conflict fatalities that are geographically dispersed within a country are more strongly negatively correlated with FDI, while conflict in neighboring countries also deters FDI. Across sectors, we find that semiconductor and biotech investments are most sensitive to conflict, while sectors like coal, oil, & gas are less affected. A synthetic counterfactual analysis of Ukraine reveals that it lost approximately 10,000 jobs annually that were directly associated with FDI following the 2014 annexation of Crimea. These patterns quantify the role of conflict in perpetuating development traps and highlight the broader economic stakes it has for development policy.

South Sudan is implementing a comprehensive reform agenda to establish a robust Environmental and Social Risk Management (ESRM) system aligned with international standards, addressing critical gaps in legal frameworks, institutional coordination, and technical capacity. This strategy outlines a phased approach across four pillars: strengthening the legal and regulatory framework, enhancing institutional coordination through mechanisms such as a national ESRM coordination body, advancing human capacity through competency frameworks, training, and professional accreditation, and promoting a culture of risk management through tools, systems, and digital infrastructure. It emphasizes sustainable capacity building beyond standalone training by institutionalizing skills and governance structures. The approach aligns with the World Bank’s Environmental and Social Framework and other international standards, while responding to findings from recent assessments highlighting fragmented mandates and weak enforcement capacity. By adopting a phased implementation—from high-risk sectors in the short term to broader cross-sectoral coverage—the strategy aims to strengthen both immediate project delivery and long-term national ESRM systems.

Water loss management has become a critical component of ensuring the sustainability of modern water supply systems, particularly under increasing pressures such as climate change, urbanization, and resource scarcity. In Croatia, sector reforms led by the Ministry of Environmental Protection and Green Transition and Hrvatske vode have emphasized systematic water loss reduction through the National Loss Reduction Action Plan (NLRAP) and supporting guidelines for public water service providers (PWSPs). The NLRAP establishes a structured methodology focused on improving system knowledge, assessing leakage levels, and implementing prioritized mitigation measures. In line with legislative requirements, PWSPs are mandated to develop individual Utility Loss Reduction Action Plans (ULRAPs) tailored to their service areas. Technical assistance under Phase 2 of the project supported the preparation of these plans through guidance, system analysis, and continuous consultations. Direct support was provided to four pilot service areas, Zadar, Krk, Petrinja, and Gospić facilitating capacity building and enabling the replication of best practices across other utilities.

This policy note examines digital skills demand in Tunisia and evaluates the country’s readiness to engage in the evolving digital economy. Using real-time labor market data from LinkedIn and Lightcast, the analysis highlights changing hiring patterns, sectoral demand, and skills trends across industries. Findings show that digital hiring surged during the COVID-19 period, followed by stabilization after 2021, reflecting normalization in labor market dynamics. Digital demand is increasingly spreading beyond the ICT sector into areas such as logistics, manufacturing, finance, and energy, underscoring the broad diffusion of digital technologies. However, demand remains concentrated in core technical roles, particularly software development, while gradually shifting toward hybrid profiles combining technical expertise with domain knowledge. Despite these trends, Tunisia’s workforce shows a relatively lower share of digital skills compared to global peers, suggesting a gap between supply and demand. Encouragingly, the country demonstrates emerging potential in advanced areas such as artificial intelligence. To fully capitalize on this potential, Tunisia will need to strengthen digital training systems, improve alignment between education and market needs, and address gaps in soft skills and language proficiency to enhance employability and global competitiveness.

This June 2026 case study by the World Bank’s Africa Gender Innovation Lab (GIL), under the Innovations in Financing Women Entrepreneurs (IFWE) initiative and in partnership with Ethiopia’s Women Entrepreneurship Development Project (WEDP), examines how cashflow-based lending (CBL) can expand credit access for women entrepreneurs. Despite representing nearly half of entrepreneurs, women in Ethiopia face structural barriers due to stringent collateral requirements. The pilot, implemented by Vision Fund and Metemamen MFIs with support from ID Inspiring Development, tested lending based on business cashflows rather than assets. Between August 2023 and March 2025, over ETB 833 million was disbursed to more than 1,600 clients, including many women, while maintaining strong portfolio quality. Findings demonstrate that CBL can effectively reach collateral-constrained borrowers, requires low-tech tools, improves efficiency, and is scalable across institutions, offering a practical pathway to promote financial inclusion and support women-led MSMEs.