Tuesday, June 20, 2017

Unions in Decline: Some International Comparisons

Union membership and clout has been dropping in the US economy for decades. But it's not just a US phenomenon: a similar drop is happening in many high-income countries. The OECD Employment Outlook 2017 discussed the evidence in "Chapter 4: Collective Bargaining in a Changing World of Work."

Here are a couple of illustrative figures. Across the OECD countries, about 17% of workers belong to a union. As the report notes: "Trade union density has been declining steadily in most OECD and accession countries over the last three decades (Figure 4.2). Only Iceland, Belgium, and Spain have experienced a (very) small increase in trade union density since 1985 ..." In each of the panels, the solid black line is the overall OECD average, for ease of comparison.

Here's a parallel figure showing comparisons across countries for "collective bargaining coverage," which is the share of employees covered by collective bargaining agreements. On average, union bargaining coverage in OECD countries declined from 45% in 1985 to 33% by 2013.

The distinction between these figures should make the point that a number of countries have rules which in some cases require that firms pay non-union workers similarly to union workers. Conversely, many of the same countries also have a raft of possible exceptions to these rules. The OECD chapter provides a more detailed discussion of these ins and outs. But several overall patterns seem clear.

1) Labor union power is weaker just about everywhere.

2) The extent of labor union power varies considerably across countries, many of which have roughly similar income levels.  This pattern suggests that existence of unions, one way or another, may be less important for economic outcomes than the way in which those unions function. The chapter notes the importance of "peaceful and cooperative industrial relations," which can emerge--or not--from varying patterns of unionization.

3) In the next few decades, the big-picture question for union workers, and indeed for all workers, is how to adjust their workplace skills and tasks so that they remain valued contributors in an economy characterized by new technologies and global ties. Workers need political representation--whether in the form of unions or in some other form--that goes beyond arguing for near-term pay raises, and considers the difficult problem of how to raise the chances for sustained pay raises and secure jobs into the future.

Friday, June 16, 2017

An Update on Foreign Direct Investment

Foreign direct investment is "an investment made to acquire lasting interest in enterprises operating outside of the economy of the investor. [T]he investor´s purpose is to gain an effective voice in the management of the enterprise. ... Some degree of equity ownership is almost always considered to be associated with an effective voice in the management of an enterprise; the BPM5  [Balance of Payments Manual: Fifth Edition] suggests a threshold of 10 per cent of equity ownership to qualify an investor as a foreign direct investor." 

That's the definition of foreign direct investment from UNCTAD, which has published the World Investment Report 2017: Investment and the Digital Economy. This year's report includes the usual detailed overview of trends, along with some discussion of the evolving policy climate for foreign direct investment and the changing role of digital companies. Notice that FDI is explicitly separated from "portfolio investment," in which international investors buy stocks or bond or other financial assets across financial borders but without any management involvement. The usual believe is that FDI plays an important role in direct facilitation of international trade, and in the diffusion of technology and management expertise across borders, while portfolio investment plays a much smaller role in these areas.

Here are some overall patterns. FDI peaked back in 2007, and the 2016 level of $1.8 trillion it had not yet surpassed that earlier level. Most FDI inflows are to developed economies, although developing economies are not far behind.

What are the major countries for FDI inflows and outflows? The US economy perhaps unsurprisingly tops both lists, but there are some eye-raisers as well. Here's the list for inflows of FDI. Three points catch my eye here. First, notice the huge drop-off in inflows to the UK in 2016, essentially matched by a large rise in inflows to Ireland. My suspicion is that this change is Brexit-related. Second, if one combines the inflows to China, Hong Kong, and Singapore--on the basis that they are all basically China-related--then inflows to the area of China are now essentially the same as those to the US economy. Third, a reason why the UK, Ireland, and Netherlands all rank so high, given that they are actually not large economies in the global context, probably involves ongoing relocations of corporate ownership across national borders: for example, perhaps a US company owns a substantial share of a firm in Netherlands, which in owns a substantial share of a firm based in a third country. 

Here's the corresponding figure for outflows of foreign direct investment. Again, the US and China lead the way. But overall, the high-income countries shown in green represent a greater share of FDI outflows than the emerging market countries shown in orange. 
We hear a lot about a globalizing world economy. So what explains why FDI has essentially been flat for a decade? 

At least some of the reasons seems to be that countries are becoming more skeptical about the potential merits of FDI, and are more likely to impose rules placing limits on foreign buyers if they fear that "strategic" assets might be held by foreign investors, that domestic workers might be laid off, and so on. UNCTAD does a count each year of changed in national investment policies, which are then broadly classified as tending to liberalize or to restrict FDI. Back in the 1990s, pretty much all the changes were on the "liberalization" side. But starting in the early 2000s, the share of such changes involving "restriction" started rising, and is now about one-quarter of the changes in any given year.  

On the other side, the rising prominence of digital multinational enterprises has tended to support the level of FDI, and keep it at least flat rather than declining. UNCTAD makes a list of the top multinational enterprises, which are ranked according to the size of their foreign assets: that is, not according to their international sales, or their international visibility, but according to their level of foreign direct investment over time. Because of this method of ranking, as the report notes, "some well-known global digital giants, such as Amazon and Facebook, do not feature in the top 100. Neither do major telecom players, such as Verizon and AT&T, whose domestic assets and revenues are very large, but whose foreign businesses are relatively small." 

Thus, here's a picture of the tech and telecom companies in the UNCTAD top 100 list of multinational enterprises, and how the list has evolved in recent years. 
 
As the report explains (citations and parenthetical references to boxes and figures deleted):
"The fast rise of tech MNEs [multinational enterprises] represents one of the most noteworthy trends in the world of global megacorporations in recent years. This phenomenon has attracted increasing attention, not only at the research and policy levels, but also in the broader public. In 2010, the relevance of tech companies in the top 100 MNE ranking compiled by UNCTAD was still limited and not significantly different than 10 years earlier. From 2010 to 2015, in contrast, the number of tech companies in the ranking more than doubled, from 4 to 10, and their share in total assets and operating revenues followed a similar, and even more pronounced, trend . This growing weight results from a group of tech MNEs, mainly from the United States, entering the ranking. Some of these companies, such as Alphabet (Google) and Microsoft, are leading the digital revolution; others, such as Oracle, heavily rely on and benefit from the acceleration of the internet to deliver their value proposition. When including telecom MNEs, other important enablers of the digital economy, 19 MNEs in the top 100 are ICT companies – a sizeable portion of megacorporations. Tech megacorporations are enjoying exceptional growth momentum."
The statistics on foreign direct investment can be hard to disentangle, because ownership of foreign assets is an interconnected and overlapping network that can cross national borders multiple times. But the sheer magnitude of these flows--$1.8 trillion in FDI in 2016--compels attention. 

Wednesday, June 14, 2017

Competition Issues in Seed and Agricultural Chemicals

The number of US public companies (that is, companies with stock traded on a public exchange and owned by those shareholders) has dropped by half in the last 20 years.  Part of the reason is a slowdown in the rate of start-ups; part is a rise in mergers and acquisitions of existing firms.  In the next few months, these forces will be playing themselves out in the markets for seeds and agricultural chemicals.  James M. MacDonald discusses one arena in which these forces are playing out in "Mergers and Competition in Seed and Agricultural Chemical Markets," published in Amber Waves from the US Department of Agriculture (April 3, 2017).

As MacDonald explains, the global economy currently has a "Big Six" of agricultural chemical companies. However, Dow Chemical and DuPont have announced a plan to merge, and Bayer has announced a plan to buy Monsanto, which would reduce the Big Six to the Big Four. At the same time, a state-owned Chinese chemical company called ChemChina has made an offer to buy Syngenta, another one of the Big Six. So here's the current industry, and the proposed transactions, in a table.



As MacDonald explains, the Big Six itself is a fairly recent development: "The “Big Six” emerged in the 1990s and early 2000s, arising from mergers among large chemical, pharmaceutical, and seed
companies as well as from their acquisitions of many smaller seed and biotechnology companies. At the time, the future of integrated life sciences companies promised to use new developments in biotechnology to support work in human pharmaceuticals, seed genetics, and agricultural chemicals. That vision did not reach fruition, as the pharmaceutical businesses later separated from the
seed and agricultural chemical businesses." But now that the Big Six has happened, markets for specific seeds are not surprisingly quite concentrated. For example, here are four-firm concentration ratios (that is, the share of sales by the largest four firms) in US production of corn, cotton, and soybeans, for 2000 and 2015..

Bar chart

The standard set of arguments applies here. Firms involved in mergers always promise "synergies," and in particular, the promises here often argue for a more effective research and development effort. Those who buy the products are more worried that less competition will mean higher prices. 

In addition, it's not obvious that larger firms with higher profits will have a more aggressive R&D effort. As Sir John Hicks famously wrote, "The best of all monopoly profits is a quiet life" (in "Annual Survey of Economic Theory: The Theory of Monopoly," Econometrica, January 1935, vol. 3, p. 8). Giant monopolies can often be slow to innovate, because why bother if your customers can't go anywhere else. MacDonald has a simple graph to illustrate this point:
Line chart
As MacDonald points out, a recent trend had been for antitrust authorities to express concerns that mergers would inhibit R&D. He writes:
"U.S. antitrust enforcement agencies rarely cited innovation concerns in merger challenges through the early 1990s, but they have been increasingly likely to do so since then and have introduced innovation concerns into merger challenges in agriculture. In 2016, the U.S. Department of Justice challenged the purchase of Precision Planting, LLC, by John Deere on the grounds that the acquisition would reduce innovation in high-speed planters. John Deere and Precision Planting, a unit of Monsanto, are the two major producers in this nascent industry. After many years of research, during 2014 each firm introduced high-speed planting systems that allow row crop farmers to substantially increase planting speeds at no cost in accuracy. While the Deere system was bundled into new planters, the Precision Planting product could be sold as a set of components and retrofitted onto existing planting equipment, including Deere’s. The Department argued that intense rivalry between the two led to improved prices for farmers and to the rapid introduction of innovative new features, and that the merger would eliminate that competition."
I can't claim to have made any intensive study of these proposed mergers. But when an industry is already quite concentrated and profitable, my bias is that proposals for further mergers should have some very high hurdles to cross. It will be interesting to see how the antitrust administrators under the Trump administration address this industry.

Tuesday, June 13, 2017

Interview with Janet Currie: Health, Liability, Overtreatment

Jessie Romero interviews Janet Currie on a range of topics in "Interview: Janet Currie," Econ Focus: Federal Reserve Bank of Richmond, First Quarter 2017, pp. 23-36. Here are a few tidbits: 

Socioeconomic Status and Effects of Pollution
"There is a large environmental justice literature arguing that low-income and minority people are more likely to be exposed to a whole range of pollutants, and that turns out to be remarkably true for almost any pollutant I’ve looked at. A lot of that has to do with housing segregation; areas that have a lot of pollution are not very desirable to live in so they cost less, and people who don’t have a lot of money end up living there. It also seems to be the case, at least some of the time, that low-income people exposed to the same level of pollutants as higher-income people suffer more harm, because higher-income people can take measures to protect themselves. Think about air pollution. If I live in a polluted place but I have a relatively high income, maybe I have better-quality windows so I have less air coming in, or I can afford to have air purifiers, or I can afford to run my air conditioner. It could even be the case that lower-income people are more vulnerable to the effects of pollution in the first place. For example, someone who is malnourished is more likely to absorb lead than someone who is not malnourished. So people who are better nourished may be better able physiologically to protect themselves against the effects of pollutants."

Reform of Joint and Several Liability

"Joint and several liability, or JSL, is essentially the “deep pockets” rule: If multiple parties are found to be liable for the harm caused, the plaintiff can collect damages from one or all of the parties, regardless of how each one contributed to the harm. So people sue the deep pocket. A hospital is a good example. When Bentley MacLeod and I first started reading about tort cases related to malpractice during child delivery, one of the things that struck us as bizarre is that they often talked about the nurse: The nurse was sitting in the nurse’s station, she didn’t come when I called, she didn’t call the doctor. We wondered, why are they spending so much time talking about what the nurse did or didn’t do? Surely the doctor was the prime mover in deciding treatment? What we eventually realized was, the nurse is the employee of the hospital, whereas doctors are generally working as independent contractors; so if you want to blame the hospital — the deep pocket — you have to tie the nurse to the lawsuit. Most of the time, under JSL, the hospital gets sued and the doctor doesn’t. If the hospital pays, legally it can try to recover damages from the doctor, but they hardly ever do that. Essentially, under JSL, the doctors are working in a regime where they’re never going to get sued. JSL reform makes the payment of damages proportional to the contribution to the harm, which makes it more likely the doctor will be sued. And if the doctor is the decisionmaking agent, then in theory that should improve outcomes."
The Difference between Overprovision and Misallocation of Medical Care 
"Many people are concerned about overtreatment and excessive spending, but the problem is more subtle. Bentley, Jessica Van Parys, and I studied heart attack patients admitted to emergency rooms in Florida. We found large differences in how doctors allocated procedures across patients; some doctors were much less likely to use aggressive treatments with older or sicker patients who might have been deemed less appropriate candidates for the treatment. Young, male doctors who trained at a top-20 medical school were the most likely to treat all patients aggressively, regardless of how appropriate the patient seemed to be. In the case of heart attacks, it appears that all patients have better outcomes with more aggressive treatment, so treating only the “high-appropriateness” patients aggressively harms the “low-appropriateness” patients. Similarly, many people are concerned that U.S. doctors perform too many C-sections. But actually, in another paper, Bentley and I found that it looks like too many women with low-risk pregnancies receive C-sections, while not enough women with high-risk pregnancies receive C-sections. So the goal shouldn’t necessarily be to reduce the total number of C-sections but rather to reallocate them from low-risk to high-risk pregnancies."
A couple of add-ons here for interested readers:

Monday, June 12, 2017

Facing the Costs of Paid Parental Leave

An AEI-Brookings Working Group on Paid Family Leave has been considering family leave policies during the last year or so, and some results of their deliberations appear in "Paid Family andMedical Leave: An Issue Whose Time Has Come" (May 2017). For the fortunate readers out there who don't concern themselves with the political leanings of DC think tanks, the American Enterprise Institute tends to leans right, while Brookings tends to lean left. Thus, the report is based on views of knowledgeable experts from a range of political perspectives. (For those who want names, the Codirectors of the report are Aparna Mathur and Isabel V. Sawhill, and the other participants are Heather Boushey, Ben Gitis, Ron Haskins, Doug Holtz-Eakin, Harry J. Holzer, Elisabeth Jacobs, Abby M. McCloskey, Angela Rachidi, Richard V. Reeves, Christopher J. Ruhm, Betsey Stevenson, and Jane Waldfogel.)

Some of the themes in the report, while certainly worth making, are not especially new. For example, "the United States is the only advanced nation that does not have a paid leave policy at the national level. The federal Family and Medical Leave Act, passed in 1993, offers 12 weeks of job-protected, unpaid leave, but only about 60 percent of the workforce is eligible for its protections. ... Polls show overwhelming public support for paid family and medical leave ... with almost 71 percent of Republicans and 83 percent of Democrats in favor of a paid parental leave policy."

But economists mistrust polls which ask if people would like to receive a pleasant new benefits, but don't place equal emphasis on the costs. Thus, for me the most intriguing point in the report is that apparently no one in the Working Group, no matter their political leanings, favored requiring an employer mandate for employers to pay the costs of paid leave. As the report notes:
"That said, paid leave generates a variety of concerns from a business perspective. Most obviously, there are business costs associated with paid leave if employers are simply mandated to provide it. For this reason, we think it is worth noting that no one in our working group favored an employer mandate. ... This approach is popular with the general public. However, we do not favor it for two reasons. First, it would be burdensome on employers, especially small businesses and those employing a disproportionately high share of likely parents. Second, it will likely lead to a reluctance to hire female workers of a certain age. ... Instead, most— although not all of us—favored a slight increase in the payroll tax on employees, with a minority in favor of reduced federal spending in other areas to pay for a new benefit. "
Here's some additional detail on their argument. As a starting point, here's an international comparison across OECD countries of paid parental leave. On the left, the bars show what percentage of income is replaces for men and for women. On the right, the bars show the length of parental leave. As the figure shows, it's fairly common for countries to have paid parental leave with a length of six months to a year, and it's common for the payments to replace about half of wages. 

In the US, a few states have enacted paid parental leave rules. Here's a table giving some description. 
As the table helps to illustrate, some of these laws are quite recent, and the evidence on their operation is not in yet. The reason why Washington state isn't included in the table, as the report notes, is: "Washington State has not yet implemented its policy because it has not established a funding mechanism." In the other states, "California, Rhode Island, New Jersey, and New York incorporated paid family and medical leave into the states’ existing TDI [Temporary Disability Insurance] programs, financed through payroll contributions. However, these four states finance the paid family and medical leave benefit exclusively through employee payroll contributions, rather than joint employer/employee contributions ..." 

The report is scrupulous in  pointing out concerns with the existing US programs, and I'll mention two of them here. One is that the existing programs do relatively little to help lower-income women. Even among those eligible for paid leave in California, the take-up rate of existing benefits has been low. 
"Many of the bottom 40 percent of households (by income) are ineligible for job-protected unpaid leave under the FMLA [Family and Medical Leave Act] because they are employed in small firms (with fewer than 50 employees) exempt from the law or because they do not meet the eligibility requirements in terms of hours worked with their current employers. In addition, survey data consistently show that workers in low-income households and those with low educational attainment frequently lack access to any form of paid leave. Moreover, those with fewer resources or less income are much less able to take up this leave even if they are eligible. This has led to a system in which the beneficiaries of current leave policies (whether unpaid or paid by an employer) are primarily those with moderate or high incomes, stable jobs, and employment in larger organizations. ..."
"Ten years after California’s paid family leave policy was implemented in 2004, take-up rates by eligible mothers ranged from 25 to 40 percent. ...  A 2011 study found that half of workers eligible for paid leave were unaware of the program, and a third of those who were aware and eligible but who did not apply for family leave reported that the wage-replacement rate was too low. Others cited the lack of job protection or worried that taking leave would make their employer unhappy or hurt their opportunities for advancement."
The report details how the members of the working group differed on a number of points, as one might expect given the membership of the group. But they also work to describe at least a loose consensus proposal that most members of the group could support as a minimum proposal. Here are some central  elements for the design of benefits:  
"Many (but not all) of those in our group think that only those who have consistently worked with their employer for at least a year (or more than 1,000 hours in a year) should be eligible. Businesses will be averse to protecting employees’ jobs during an extended leave of absence if they contributed only a short period of work before taking leave. Some in our group are in favor of even stricter eligibility rules, but all agree that the employee should have contributed significantly to this benefit through continued participation in the workforce (in the case of a payroll tax) and with a specific
employer (for purposes of job protection). ...
"[I]t would keep the benefits relatively targeted and inexpensive by offering a 70 percent
replacement rate up to a cap of $600 per week, for a limited number of weeks (e.g., eight weeks). ... [I]t would include job protection. ... The plan’s key elements are its budget neutrality, its extension of benefits to the middle and working class and not just the poor, and its establishment of a floor on the number of weeks of leave provided. States and private employers would be free to supplement this leave if they chose to do so.
"Our working group would support such a plan— not as everyone’s preferred policy but as a reachable compromise in our group—and we put it forward for others to consider."
I very much like the honesty and straightforwardness of the plan. It acknowledges costs. It acknowledges that the US is a diverse country in its political and economic dimensions, and thus sees the federal role not as supplying a one-size-fits-all solution, but rather as setting a baseline on which states can build. It focuses on how to provide basic benefits for those who now often have no leave at all, paid or otherwise. As the report notes: "Overall, about 40 percent of households in the United States with children under the age of 18 are either headed by a single mother or are homes in which the mother is the primary breadwinner, according to data from the Pew Research Center. This share was just 11 percent in 1960."

As have explained in other posts, I think the evidence on the benefits of family leave is not as clear-cut as I might prefer; for more discussion, see "Some Economics of Parental Leave" (March 3, 2017). For example, one purported set of benefits of parental leave is giving parents a chance to remain home with children, at least for a time, while another set of benefits is that the parents are more likely to return to the paid workforce. The goals of more time with children and more connection to the workforce are tough to reconcile. The factors that determine whether low-wage parents returns to the labor force may have less to do with the availability of paid leave, and more to do with whether their job has been protected for a time and they are easily welcomed back, or how attractive the low-wage job is to them in the first place.  But the time crunch between parenthood and work is particularly rough in the couple of months right after a newborn arrives, and finding ways to ease that time crunch for the high proportion of US mothers who have limited resources seems a worthwhile goal. 

Saturday, June 10, 2017

Interview with Timothy Taylor: Quick Hits

My friend Stephen Dupont, a public relations and marketing guy, did an interview with me at his website.  The interview is aimed at a broad audience, with quick hits on a variety of subjects. There's much more at the website, but here's a sample: 

Stephen Dupont: Do you affiliate yourself with any particular school of economic thought or philosophy? 
Timothy Taylor: The great health care economist Victor Fuchs used to say that he was a “radical moderate.” He argues that moderates need to be radical, too, or else they will be drowned out by noise from radicals who are on the extremes. Of course, the problem with trying to be middle-of-the-road is that you get hit by ideological traffic going both directions.

Stephen Dupont: As the managing editor of the Journal of Economic Perspectives for more than 30 years, you’ve been a keen observer of economic trends, theories and policies. As you look back, is there anything that has surprised you over the past 30 years in the world of economics?
Timothy Taylor: For me, economics is an ongoing parade of surprises. I was surprised when the Berlin Wall came down, and a number of economists turned to the problem of “transition economies.” I am stunned that China has become the largest economy in the world. I was shocked that the countries of Europe—and Germany in particular—actually gave up their traditional currencies for the euro. I thought U.S. health care spending already sky-high back in 1980 at 9% of GDP, and now it’s approaching 18% of GDP. I did not suspect that the U.S. financial system and economy was as fragile as it turned out to be in the Great Recession of 2007-2009. I never would have thought that the Federal Reserve would take its policy interest rate down to near-zero, and hold it there for seven years. I flatter myself that my understanding of the economy is pretty good—except that I only learn to understand what has happened with a time lag of about two years.

Friday, June 9, 2017

Environmental Protection and Africa's Cities

Africa's cities are growing rapidly, which presents both an environmental problem and a policy opportunity. The problem is that many of these cities already have severe environmental issues. The opportunity is that because these cities are much smaller than they will be in a few decades, there are opportunities now to guide and shape their growth in ways that can be much more cost-effective than trying to clean up the mess after it has already happened. Roland White, Jane Turpie, and Gwyneth Letley explore these issues in a World Bank report, Greening Africa's Cities : Enhancing the Relationship between Urbanization, Environmental Assets, and Ecosystem Services (May 2017).

On the patterns of urbanization in Africa, they write:
"Urbanization in Africa began later than in any other global region and, at a level of about approximately 40%, Africa remains the least urbanized region in the world. However, as indicated in Figure 3, this is rapidly changing: SSA’s cities have grown at an average rate of close to 4.0% per year over the past twenty years, and are projected to grow between 2.5% and 3.5% annually from 2015 to 2055 (Figure 3). By contrast, globally the average annual urban population growth rate is projected to be between 1.44% and 1.84% from 2015 to 2030 (WHO 2015). From an environmental perspective, this has two important implications. On the one hand, most of Africa’s urban space has yet to emerge. Much of the area which will eventually be covered by the built environment has not yet been constructed and populated. Crucial natural assets – and significant biodiversity – thus remain intact in areas to which cities will eventually spread. On the other hand, this is changing quickly: pressures on the natural environment in and around cities are escalating steadily and these assets are increasingly under serious threat."

The existing environmental hazards levels in many African cities are often severe. They write: "For the entire region the proportion of urban residents with access to sanitation was estimated to be only 37% in 2010. Solid waste coverage also remains very limited with collection rates for many African cities at below 50% ..." 

Here's a figure showing particulate concentrations in a range of cities. You think some cities in China have problems with air pollution? On this measure, a number of cities in Africa are considerably worse. 

It's not a surprise that the health toll from these environmental pollutants is severe. In a number of countries in sub-Saharan Africa, the estimates of total welfare losses due to high air pollution are often in the range of 5% of GDP.  Here's a table showing estimates of premature deaths from various risk factors. For unsafe water and sanitation, the estimates of premature deaths are falling. For household and ambient air pollution, estimated deaths are rising.



There's no secret about the solutions here, and White, Turpie and Letley lay them out in some detail. Protect aquatic ecosystems like rivers and marshes. Avoid spreading pollution through stormwater runoff. Collect and treat sewage. Limit sources of air pollution. Preserve some greenspace. Don't build in places that are going to flood every few years. Such a list of policy steps can easily be expanded. Again, the goal is not to limit or hinder the urbanization of countries in sub-Saharan Africa, but only to guide it in more environmentally friendly directions. But the governance issues are severe. The authors write:
"Cities need to strengthen the institutions on which effective green urban planning and management rest by addressing structural limitations, accountability and capacity constraints. ... It is also important to recognize that the widespread planning failures evident in African cities are, in essence, a symptom of institutional weakness. In a “greening” context, green urban planning fails to emerge because African urban management institutions lack the capacity to generate such plans, and,
whether or not they are environmentally sensitive, the plans that are produced are seldom implemented or enforced. While the strengthening of government institutions is key, it is also perhaps one of the most challenging issues to address. ... Finally, the green urban development agenda needs to be better financially resourced. In the context of the limited fiscal devolution characteristic of cities in many African countries, there is a very substantial agenda here."
The authors of the report are clear-eyed about these problems, but the report is nonetheless infused with a can-do spirit, and features a number of encouraging stories. I hope I am wrong, but I confess that I am not optimistic that most of Africa's cities will rise to meet these environmental challenges.

For those interested, a couple of other recent posts on sub-Saharan Africa are: