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May 2011

Social Cohesion

Mario Pezzini's picture

Day two of the 2011 ABCDE conference has just finished and so far, the conference has given me a lot to think about. There seems a growing consensus that high levels of inequality are not conducive to sustained growth and development. At the Development Centre we go beyond this, arguing that societies that are growing rapidly and undergoing significant structural changes could see their growth trajectories compromised unless they put in place policies to help manage the process.

What is less clear is what policies should be employed, and in what order. Given the extensive changes that many countries are experiencing, focusing on inequality or poverty reduction is not enough.  Rapid economic growth may be instrumental to reducing poverty, but if large parts of the population get absorbed into the informal sector for example, then these “non-poor” will remain very vulnerable over time.

Does Competition Make Banking More Dangerous?

Thorsten Beck's picture

Post-Debate Update:

The debate is over, opening statements, rebuttals and closing remarks have attracted lots of comments and the votes been cast and counted. The results show that a (probably not very representative) majority do not think that competition is dangerous for stability, though the reasons for this might vary quite a lot. Some might have been swayed by my argument that it is regulation that makes banking more dangerous – if of the wrong kind. This is also consistent with Ross Levine’s view that the recent crisis "represents the unwillingness of the policy apparatus to adapt to a dynamic, innovating financial system." Understanding the links between competition, regulatory policies and stability is certainly a topic that deserves to be to be explored more – stay tuned for an update over the summer.

Original Post:

What's at the Top of the Agenda for the Financial Sector after the Crisis?

Maria Soledad Martinez Peria's picture

The 2011 Overview Course of Financial Sector Issues took place earlier this month at the World Bank's headquarters in Washington, DC. This annual event is sponsored by the Office of the Chief Economist of Finance and Private Sector Development, and it provides an overview of issues of current importance for policy-makers, researchers, and practitioners working in the financial sector. Speakers included a number of well-known thinkers and researchers on financial sector issues such as Simon Johnson, Ross Levine, and Franklin Allen, and attracted some 70 external participants from central banks, ministries of finance, and bank regulatory agencies representing 45 countries.

The theme of the course this year was Financial Sector Practices and Policies after the 2007-2008 Crisis (view the full agenda). Lectures, case studies, and panel discussions covered a broad spectrum of issues surrounding this theme, such as long-run policy lessons from the financial crisis, the role of the government in the financial sector after the crisis, bank risk management models before and after the crisis, bank resolution mechanisms, building crisis management capabilities, the future of bank regulation, macro-prudential regulation and stress testing banking systems, capital markets and pension systems after the crisis, to mention the main ones. Also, the course looked into longer-term issues related to the development of the financial sector, e.g. remittances, financial inclusion, SME finance, and microfinance.

Food price shocks, food security and potential policy responses

Will Martin's picture

(Summary of parallel session 10 at the ABCDE, Paris)

This session involved the presentation of three papers. The first looked at the importance of high food prices for poverty in developing countries. The second looked at the optimal policies for an individual country using trade policies to insulate its market from price volatility in the world market. And, the third considered the implications of the policies actually undertaken by developing countries.

The first paper presentation showed that high food prices raise poverty substantially, implying that policy makers in developing countries are right to be concerned. The second showed that—for individual countries—an appropriate response to high food prices appears to be use of export restrictions in exporting countries or reductions in import barriers in importing countries. The third showed that most countries actually respond in this way, but that these actions are collectively ineffective in reducing the volatility of domestic prices. What appears to be needed is to identify policies that can more effectively deal with the problem of food price volatility.

Social Protection for Inclusive Growth: A Focus on Sub-Saharan Africa

Giorgia Giovannetti's picture

 ‘Social protection for inclusive development’ is a timely topic. The G20 ‘Seoul Development Consensus (2010)’, identified growth with resilience as a key pillar. Furthermore, the recent prevailing uncertainty (economic, political and environmental) reinforces the needs for measures, such as social protection, to both safeguard as well as promote development. More broadly, a consensus is emerging that social protection is an important instrument in supporting progress towards inclusive growth and the Millennium Development Goals (MDGs), especially in those situations (covariate shocks, imperfect markets) where remittances  and other private safety nets might be insufficient (see Nyarko).

The session Social protection for inclusive growth (based on contributions to the European Report on Development 2010) reviews new generation programmes, emphasising reasons for success and failure. It highlights the features which make social protection possible, affordable and feasible even in low-income countries. Evidence presented shows that social protection programmes can mitigate risks and reduce chronic poverty and vulnerability without producing significant distortions or disincentives (Klasen on South Africa). Besides South Africa and the well known cases of Brazil, Mexico, other recent programmes have been effective in reducing poverty and inequality (cf Table 1 and ERD 2010 for evidence).

What Influences Individual Donations to Disaster Victims?

Anne-Katrin Arnold's picture

We see donation appeals everywhere these days - to help the people in Japan, to help the people in Darfur, to help the people in Haiti. What influences our decision to give? An interesting study comes from British psychologists, who analyzed how individuals respond to donation appeals in the wake of man-made disasters - like war - versus natural disasters. The authors around Hanna Zagefka from Royal Holloway University in London found that natural disasters elicit more donations than those caused by people. Their explanation: people tend to assign some blame to the victims of man-made disaster, while they blame no one for being overrun by a Tsunami.

Podcast: Can We Get All Children in School and Learning by 2020? Harvard interviews Halsey Rogers

Christine Horansky's picture

How we can make the next decade one in which all children, everywhere, are in school and learning? The World Bank's Lead Economist for education, Halsey Rogers, joins the Harvard EdCast from Washington to discuss the new Education Strategy 2020 and a global agenda for learning.

Miriam Sabzevari blogs from the ABCDE

Croissants, coffee, and foreign dignitaries lined the spacious conference halls this morning as I walked in (or rather, bounced in with excitement.)  As the giant wall-mount proclaimed to me, this year’s World Bank-OECD Annual Bank Conference for Development Economics in Paris is vaguely themed, “Broadening Opportunities for Development.”

Parallel Session 4: Poverty and Inequality of Opportunity

Peter Lanjouw's picture

Recent years have seen growing attention to inequality of opportunity and how processes of economic development are shaped by, and in turn shape, such inequalities.  One strand of research has been concerned with the development of methods to quantify the extent of inequality of opportunity as well as the impact of interventions and policies on such inequalities. I am organizing a parallel session on May 30 as part of the ABCDE conference that will present three studies that aim to substantially extend  this measurement agenda. 

A paper by Dirk van der Gaer will describe recent research that proposes a methodology to evaluate social projects from an equality of opportunity perspective.  The approach looks at the effect of a social program on the distribution of outcomes conditional on morally irrelevant characteristics (such as education level and indigenous background).  The methodology is applied to evaluate the effects of Mexico’s opportunidades program on children’s health outcomes. 

Parallel Session 2: “Lessons from the NBER Project on African Economic Successes”

This session started with a brief overview of the project by David N. Weil, one of the directors of the NBER project.  Following the overview, results from four sub-projects were presented by the researchers who conducted them.   The session was chaired by Augustin K. Fosu of the World Institute for Development Economics Research. 

The Project on African Economic Successes is a five-year research endeavor funded by the Bill and Melinda Gates Foundation and administered by the National Bureau of Economic Research.  The co-directors of the project are Sebastian Edwards, Simon Johnson, and David N. Weil.  The goals of project include informing policy making in Africa and elsewhere, strengthening the research base on African economies, building links between African researchers and those elsewhere, and bringing new researchers to the study of African development.  A particular interest of the project, as evidenced by its name, is in things that are going well in Africa.  This includes new technologies and industries, successful health interventions, increases in market integration, better functioning institutions, and successful post-conflict transitions.  However, having a “success” to report was definitely not a requirement for inclusion in the study.  

Parallel Session 1: Skills Toward Employment and Productivity in Developing Countries: From Evidence to Policies

Rita Almeida's picture

Skills affect individual and firm productivity as well as countries’ prospects for sustained and faster economic growth.  Yet evidence exists that many employers are concerned about skills constraints (see figure below); and that in many countries, unemployment and underemployment among educated youth are a problem.

Quote of the Week: Hugo L. Black

Shanthi Kalathil's picture

"The constitutional guarantee of a free press rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public, that a free press is a condition of a free society...Freedom to publish means freedom for all and not for some. Freedom to publish is guaranteed by the Constitution, but freedom to continue to prevent others from publishing is not."

-- U.S. Supreme Court Justice Hugo L. Black

ABCDE: Combine our knowledge and best practices

Angel Gurría's picture

The following post originally appeared on the OECD Insights blog.

These are momentous days for the OECD and its work on development. Last week, US Secretary of State Hillary Clinton chaired our 50th Anniversary Ministerial Council Meeting, at which Ministers urged the OECD to adopt a comprehensive new approach to development. They gave us a strong mandate to launch a development strategy in line with our member countries’ aim of promoting development worldwide, and of achieving higher, more inclusive, sustainable growth for the widest number of countries. This effort will entail greater collaboration and knowledge sharing, mutual learning, and deeper partnerships with developing countries and other international organisations.

This week, we are co-hosting the ABCDE, joining forces with the World Bank and France in bringing together some of the best and brightest thinkers on development economics. We’re putting into practice our desire to deepen our understanding of the diverse realities and challenges that developing countries are facing in today´s rapidly changing economic landscape.


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