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Governments (and donors alike) don’t like dealing with informality. It’s messy, dirty, essentially unmeasurable, and its character varies dramatically. From one industry to the next. From one city to the next. It’s also beset with fiendishly difficult problems – informal firms are often household enterprises (employing mainly family labour, and not hired labour). Thus, they have to make impossible trade-offs between production and consumption.
And yet – the size and the importance of the informal sector in most countries shows no signs of abating. On average the informal share of employment ranges from 24 per cent in transition economies, to 50 per cent in Latin America and over 70 per cent in sub-Saharan Africa. In India, employment within the informal sector is growing, while that in the formal sector remains stagnant. Yet - very little is known about the relationship, whether symbiotic or competitive, between the two sectors.
In a new paper, I notice that in India formal firms tend to cluster with informal firms – especially in industries like apparel, furniture and meal-making. The firms coagglomerate not only so that they can buy from and sell to one another – but importantly, also because formal firms tend to share equipment with and transfer technical knowledge to their informal counterparts. Such technical and production spillovers are found in clusters of domestic-foreign, exporter-non-exporter and high-tech-low-tech firms. It is no surprise then that formal and informal activity could be complementary. Informal can also be an outlet for entrepreneurial activity, especially in places with high levels of corruption, or where formal firms are often mired in complex regulations.
“What is that, on this side?” the Chief Minister asked. “It is the earphone connector of an old cellphone Sir” Rishikesh said. “What do you use it for?” the Chief Minister asked. “It is like the ear Sir”, Rishikesh said, “It is where the sound enters”.
I was standing behind the Chief Minister, Nitish Kumar of Bihar, and I was amazed as he seemed to be. This young man from a village in Bihar had actually made a functioning hearing aid using electronic waste. He even designed his own Styrofoam cutter to quicken the production process. And the cost of the hearing aid is only 75 rupees ($1.20)! The cutter costs a few dollars only.
Nitish Kumar was making a tour of the Innovation Expo at the Bihar Innovation Forum (BIF). For me, Rishikesh was clearly the most amazing talent, but there were good innovations in many, many areas. Recycling groundwater for irrigation, thus slowing the depletion of scarce groundwater resources; using rice husks to generate electricity in the village; an Internet platform that allows small investors to contribute to grassroots loans; a platform to harness traditional culture to create jobs; I could go on.
The BIF is organized by Jeevika, Bihar’s flagship livelihoods program, which has empowered over a million women already and connected them to banks. I am proud to say that the World Bank is a long term supporter of both Jeevika and BIF.
Many people associate innovation in India with big cities like Bangalore and Chennai. Bihar decided seven years ago to see what innovation can come from its villages. This year they looked again, not only within Bihar but across India and found innovative rural solutions from 16 states. And it does not stop at a forum. The Chief Minister announced the same day that Jeevika will create an Innovation Center to support the grassroots innovators with handholding and technical assistance and to make sure that what works gets scaled up in many villages. This could transform the rural landscape!
Bad conditions of mobility and accessibility to jobs and services in most metropolitan regions in developing countries are a key development issue. Besides the negative effects on the wellbeing of their populations associated with traffic congestion and time spent on transportation, the latter mean economic losses in terms of waste of human and material resources.
The much anticipated Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (“the Act”) has just come into force in India on January 1st, 2014. Unlike the replaced 1894 legislation, this act addresses the rehabilitation and resettlement of those who depend on land, in addition to land owners. As emphasized in its title the new act places a greater emphasis on transparent processes at various stages: for example, through its mandatory social impact assessments, public hearings, and dispute resolution mechanisms.
The other key emphasis in the act’s title refers to a new compensatory mechanism. The new act now provides for up to two times market value, against one time in the previous act and this figure is then doubled by applying a one hundred percent “solatium” against 30% in the previous act (additional compensation). Though people get more compensation under new act, an increase in multiplier does not address the fundamental question of determining “market value” in a country where registered values under-represent land purchase price to evade high stamp duties. The challenge is exacerbated in rural areas where there are fewer land transfers, and therefore fewer registered sales deeds to use as reference points. In such situations, a valuation that is perceived to be more “fair” can be found only through consultations and dialogue, as demonstrated by two case studies from World Bank financed projects in India:
While I have not seen any research evidence to support this particular contention, I have been in a number of presentations over the years about the 'Finnish success in education' in which the fact that Finnish children watch cartoons with subtitles is mentioned as a contributing factor to their literacy development. Even if there are no peer-reviewed journal articles about the impact of this practice in Finland (if anyone knows of any, please do feel free to send them along!) or many other places (subtitling on television has of course been a common practice in many countries of the world for quite some time), there is some pretty compelling evidence from a little initiative in India that has been reaching big audiences for over a decade that this sort of thing can make a small but meaningful difference in the lives of many illiterate and low literate people. Sometimes innovation is the result of doing something 'old' in a 'new' place (often with a slight twist).
Back in November, PlanetRead was awarded the first-ever 'International Prize' as part of the new U.S. Library of Congress Literacy Awards [disclosure: I am a member of the advisory board for these awards] in recognition of its pioneering work in the practice of Same Language Subtitling (SLS), "the idea of subtitling the lyrics of existing film songs (or music videos) on TV, in the ‘same’ language that they are sung in. Call it Karaoke on Bollywood for mass reading! A deceptively simple innovation, SLS is already delivering regular and inescapable reading practice to 150 million weak-readers in India."
One notable characteristic of each of the three inaugural winners of the Library of Congress Literacy Awards is that they largely work outside of traditional 'educational' institutions as part of their efforts to promote reading. In the case of Reach Out and Read, this means connecting with parents and young children in pediatric exam rooms. 826 National supports store front writing and tutoring centers in local communities. PlanetRead focuses its outreach on a place where, like or not, many people spend a lot of their free time: watching television. Brij Kothari, the founder of PlanetRead, joked during the awards ceremonies at the Library of Congress, some people might say that TV is the enemy of reading, to which we reply: embrace the enemy!
Shanta: Jishnu, your blog post and mine on cash transfers generated a lot of comments. Some people argued that giving poor people cash will not “work” because they will spend it on consumption rather than on their children’s education, which is something we care about. What do you have to say to that?
Jishnu: I don’t think the question “does giving cash to poor people work?” is well-defined. It can only be answered in the negative if we (the donors who give the cash) impose our preferences and judge what poor people spend on relative to those preferences. But if we give poor people cash so they will be better off, then—by definition—they are better off, regardless of how they choose to spend the extra money.
These are some of the views and reports relevant to our readers that caught our attention this week.
How Information Flows During Emergencies
MIT Technology Review
Mobile phones have changed the way scientists study humanity. The electronic records of these calls provide an unprecedented insight into the nature of human behaviour revealing patterns of travel, human reproductive strategies and even the distribution of wealth in sub-Saharan Africa. All of this involves humans acting in ordinary situations that they have experienced many times before. But what of the way humans behave in extraordinary conditions, such as during earthquakes, armed conflicts or terrorist incidents? READ MORE.
‘Fragile Five’ Is the Latest Club of Emerging Nations in Turmoil
The New York Times
The long-running boom in emerging markets came to be identified, if not propped up, by wide acceptance of the term BRICs, shorthand for the fast-growing countries Brazil, Russia, India and China. Recent turmoil in these and similar markets has produced a rival expression: the Fragile Five. The new name, as coined by a little-known research analyst at Morgan Stanley last summer, identifies Turkey, Brazil, India, South Africa and Indonesia as economies that have become too dependent on skittish foreign investment to finance their growth ambitions. The term has caught on in large degree because it highlights the strains that occur when countries place too much emphasis on stoking fast rates of economic growth. READ MORE.
These are some of the views and reports relevant to our readers that caught our attention this week.
How women will dominate the workplace BRIC by BRIC
Despite recent wobbles in the BRICS economies, most economists agree that the majority of world economic growth in the coming years will come from emerging markets. The story of their rise to date has been one in which women have played a large and often unreported role. I believe that as the story unfolds, women's influence will rise further and emerging markets' path to gender equality may follow a very different route to that of most developed countries. READ MORE
James Harding: Journalism Today
BBC Media Center
To so many journalists, Stead has been the inspiration, the pioneer of the modern Press. His zeal and idealism, his restless fury at inequality and injustice; his belief that dogged, daring investigations could capture the public’s imagination and prompt society to change for the better; his muscular opinions, his accessible design and his campaigning newspapers – and, no doubt too, a dab of ego, showmanship, and human folly – has made him the journalist’s editor. I remember standing in the newsroom of The Times in late 2010 when the then Home Editor told me of a story that Andrew Norfolk, our correspondent based in Leeds, was working on. It was about child sex grooming: the cultivation of young, teenage girls by gangs of men who plied them with drink and drugs and passed them around middle-aged men to be used for sex. And I remember thinking: ‘This can’t be true, this feels Dickensian, like a story from another age.’ READ MORE
Fact #1: One in six people still defecate in the open.
Fact #2: Most of them are not entirely convinced that a toilet does any good.
Fact #3: Many of the recent toilet adopters still like to go in the open.
I don’t mean to be alarmist, but these signal a need for a shift in thinking about the complex problem of addressing behaviour change with respect to toilet adoption.