- IO meets development
In 2014, Swiss voters will have to decide on two referenda which mandate restricting immigration.
The first is sponsored by the right-wing Swiss People’s Party (SVP) and seeks the reintroduction of quotas for the number of foreigners allowed to work in Switzerland. The proposal is contrary to the free movement of workers agreement that Switzerland has signed with the European Union. While the SVP argues that the accord with the EU can be renegotiated, this will most likely be an illusion since such a move would open the door to renegotiating all bilateral agreements Switzerland has signed with the EU.
Egyptian writer and commentator Bassem Sabry talks to Hartwig Schafer, World Bank Director for Djibouti, Egypt and Yemen about the economic challenges facing Cairo.
Sabry: What do you think are the questions that are missing from the discussion on Egypt right now?
Schafer: I think the question is, what is the priority right now for Egypt? If we go back two and a half years, the revolution was basically the result of growing exclusion and inequality. And that is still, in my view, the top priority.
In his post on this blog, Augusto Lopez-Claros correctly identifies illiteracy as an important factor in global inequality, and places the blame for much of the illiteracy that exists squarely at the feet of government choices. A perspective from South Africa – a country with extreme inequality – confirms that education may be the key to reducing inequality.
Not surprisingly, given their history, South Africans are obsessed with inequality. Income distribution features prominently in all political debates, in government policies and in the National Development Plan. Yet there is little understanding that the roots of this inequality lie in the labour market, particularly in the wage distribution, and that changing this distribution requires a dramatic improvement in the weak quality of most of South Africa’s schools.
Today, the World Bank Group is issuing Global Financial Development Report 2014: Financial Inclusion. The report is the second in a new series on global financial development. It follows up on last year’s inaugural issue, which focused on rethinking the state’s role in finance.
Financial inclusion is a logical choice for the report’s theme. Access to financial services is crucial for reducing poverty and boosting shared prosperity, as demonstrated by recently available data and evidence showcased in the report. At the same time, real-world financial systems are far from inclusive. Globally, 2.5 billion people—more than a half of the world’s adult population—have no bank accounts, lacking efficient mechanisms to save money and pay bills. A vast majority of the “unbanked” live in the developing world (figure 1).
The report comes at a propitious time, because financial inclusion has become a subject of heightened interest. Over 50 countries have recently committed to formal targets and goals for financial inclusion. And last month, during the World Bank-IMF Annual Meetings, President Jim Yong Kim put the issue into spotlight by calling for universal financial access for all working-age adults by 2020.
The 2014 Global Financial Development Report, released today by the World Bank Group, presents the most comprehensive review to date of research findings on an increasingly prominent issue in international economic policy: financial inclusion. It also highlights several key topics that are linked to the growing interest in this topic – advances in technology, product design innovations and the role of financial education in financial inclusion.
It’s easy to understand the focus on technology in this kind of report. Mobile phones and other telecommunications and digital technologies offer potential opportunities for the cost-effective expansion of financial services into previously overlooked or under-served markets. Technology is only part of the reason, however, for increased attention to financial inclusion. There is also a new appreciation for the role of financial services in the lives of the poor – an appreciation gained through a pioneering research effort using “financial diaries” methodology. This includes an awareness that even the best supply-side responses – often powered by new technologies – need to understand the demand side of the equation to be commercially successful and to offer value to consumers.
It’s smart, well-written and provides a deeper intellectual foundation for much of the most interesting thinking going on in the aid business right now. Ben Ramalingam (right)’s Aid on the Edge of Chaos should rapidly become a standard fixture on any development reading list.
The book argues for a major overhaul of aid in recognition that the world is made up of numerous interlocking complex systems, far removed from the assumed linear world of cause → attributable effect that underpins a lot of aid programmes. That fits pretty perfectly with a lot of the stuff on governance, institutional reform etc from ODI, Matt Andrews, and Oxfam’s own work, all covered on this blog. But it adds to it in important ways.
- It deepens our understanding of complexity and systems thinking, drawing on a range of other disciplines
- Much of the current aid thinking about complexity is happening in work on governance and (to a lesser extent) advocacy. The book widens the scope to just about every corner of the aid business – management, humanitarian, health etc
- Its 25 great case studies will spark ideas in people’s heads about how they can apply the thinking in their own work
The argument is divided into three sections: a thorough critique of the current aid system; an introduction to complexity and systems thinking; and a final ‘so what’ section on the reform of aid.