Breaking Out of the Middle-Income Trap: Open Government Approaches

This blog is adapted from Sanjay Pradhan's remarks at the Asian Development Bank Annual Meetings in Yokohoma, Japan on May 5.

The last mile to break out of the middle-income trap to reach high-income has proven daunting and ultimately elusive for many countries.  To traverse this uphill journey, middle income countries (MICs) face three major imperatives: first, accelerate private investment and growth, second, ensure better service delivery to make growth inclusive and equitable, and third, ensure environmental sustainability.  The role of government is critical in this, but governments alone cannot tackle the enormous scale of these challenges.  Governments that are open and collaborative with the private sector, civil society, and citizens can tackle these challenges through complementary actions.  The 75-country Open Government Partnership (OGP) - as a platform where reformers from  government and civil society co-create commitments and implement actions - provides some valuable examples of how open government can help countries traverse their last mile.  

First, more open governments can attract higher private sector investment and growth. In 2014, South Korea’s National Investment and Credit Evaluation, Inc. upgraded the Philippines to investment grade, citing enhanced government transparency, which improved the country’s risk profile.  The Philippines also used the OGP platform - wherein government co-creates commitments with civil society and the private sector - to commit to improving the ease of doing business in specific areas identified by the private sector, dramatically improving its ranking in the World Bank’s index from 138 in 2013 to 95 in 2015.  This helped enhance investor confidence, resulting in a 10% increase in investment and a 66% jump in foreign direct investment (FDI) from 2010 to 2014.

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