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How Well did We Forecast 2014?

Shanta Devarajan's picture

A year ago, we polled Future Development bloggers for predictions on the coming year (2014).  Looking back, we find that many unforeseen (and possibly unforeseeable) events had major economic impact. 

We missed the developments in Ukraine and Russia, the spread of the Islamic State in Iraq, the outbreak of Ebola in West Africa, the collapse in oil prices and their attendant effects on economic growth.  At the same time, we picked the winner of the soccer World Cup, and got many of the technology trends right. Perhaps economists are better at predicting non-economic events.

Here’s the scorecard on the seven predictions made:
 

Accountancy: Framing the Future

Samia Msadek's picture

 

Strong and effective financial reporting rarely grabs headlines, but the vulnerabilities created by weak or ineffective systems of financial reporting certainly do – a number of well-publicised accounting scandals come quickly to mind. 

At the Governance Global Practice we are working to ensure that developing countries grow their economies on solid foundations, with appropriate accountability frameworks that are effectively enforced.

Key to driving change in this area is the global accountancy profession and I am looking forward to meeting with leaders from many developing countries at the upcoming Accountancy Development for Results global event in Rome on November 10. This will take place on the occasion of the World Congress of Accountants.

Replacing Europe’s Dual Labor Markets with a Single Contract

Tito Boeri's picture

In recent decades, many European countries have tried to instill greater labor market flexibility through increased use of fixed-term, temporary work contracts, as opposed to open-ended or permanent ones. The result has been dual labor markets, with temporary workers having fewer rights and job security than those on permanent contracts. One expert on the topic – Tito Boeri, Professor of Economics and Dean for Research at Bocconi University, Milan – stresses that temporary workers were especially hard hit during the Great Recession.

Austerity vs. Fiscal Stimulus: A False Dilemma?

Augusto Lopez-Claros's picture

The 2008-2009 global financial crisis led to a number of large–scale government interventions across the world. These included massive provisions of liquidity, the takeover of weak financial institutions, the extension of deposit insurance schemes, purchases by the government of troubled assets, bank recapitalization and, of course, packages of fiscal stimulus, sometimes of a scale not seen since World War II. Even the IMF, the world’s traditional guardian of sound public finance, came out strongly in favor of fiscal loosening, arguing through its managing director that “if there has ever been a time in modern economic history when fiscal policy and a fiscal stimulus should be used, it's now” and that it should take place “everywhere where it's possible. Everywhere where you have some room concerning debt sustainability. Everywhere where inflation is low enough not to risk having some kind of return of inflation, this effort has to be made".

Have Humans Evolved to Manage Megacities?

Chandan Deuskar's picture
Ancient cities, like Mohenjodaro in modern-day Pakistan, emerged relatively recently in human history.
Ancient cities, like Mohenjodaro in modern-day Pakistan, emerged relatively recently in human history (photo courtesy of Saqib Qayyum used through a Creative Commons license.)​


The growth of large metropolitan areas around the world has been very recent and very rapid, particularly when measured against the duration of human beings’ existence as a species. For the first 95% of our time on earth, we built no settlements at all. Cities of a million people arose during only the last 1% of homo sapiens’ time on earth, and there are already 500 such cities in the world today.

If we have spent most of our existence as small wandering bands, does that mean we are ill-equipped to manage urban settlements of this vast size? The key to success in our current urban transformation may in fact be the same as the key to mankind’s earliest origins - our ability to cooperate.

Green Bonds Market Tops $20 Billion, Expands to New Issuers, Currencies & Structures

Heike Reichelt's picture

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Annual Green Bonds Issuances


In January, World Bank Group President Jim Yong Kim urged the audience at the World Economic Forum in Davos to look closely at a young, promising form of finance for climate-smart development: green bonds. The green bond market had surpassed US$10 billion in new bonds during 2013. President Kim called for doubling that number by the UN Secretary-General's Climate Summit in September.

Just a few days ago—well ahead of the September summit—the market blew past the US$20 billion mark when the German development bank KfW issued a 1.5 billion Euro green bond to support its renewable energy program.

Should the World Bank Become A Remittance Center?

Dilip Ratha's picture

Last week the New York Times featured an editorial suggesting that the World Bank should become a remittance center. Remittances are the "largest and arguably most effective antipoverty effort in the world.....financed by the poor themselves...,” it stated. “But the cost to transfer those billions is likely to rise soon...[as] big banks are leaving the money-transfer business, including Bank of America, Citigroup and JPMorgan Chase."  

"If banks can’t profitably transmit remittances — and won’t do so as a low-margin courtesy — then other secure, low-cost options must be found. One solution would be for the World Bank to become a remittance center.” 

Why should Governments Spend on Sanitation?

Shanta Devarajan's picture

A puzzle:  Sanitation is one of the most productive investments a government can make.  There is now rigorous empirical evidence that improved sanitation systems reduce the incidence of diarrhea among children.  Diarrhea, in turn, harms children’s nutritional status  (by affecting their ability to retain nutrients).  And inadequate nutrition (stunting, etc.) affects children’s cognitive skills, lifetime health and earnings.  In short, the benefits of sanitation investment are huge.  Cost-benefit analyses show rates of return of 17-55 percent, or benefit/cost ratios between 2 and 8.

But if the benefits are so high (relative to costs), why aren’t we seeing massive investments in sanitation?  Why are there 470 million people in East Asia, 600 million in Africa and a billion people in South Asia lacking access to sanitation?  Why are there more cellphones than toilets in Africa?

The Longer World Waits to Address Climate Change, the Higher the Cost

Rachel Kyte's picture

Climate change ministerial, IMF/World Bank Spring Meetings 2014In September, the world’s top scientists said the human influence on climate was clear. Last month, they warned of increased risks of a rapidly warming planet to our economies, environment, food supply, and global security. Today, the latest report from the UN Intergovernmental Panel on Climate Change (IPCC) describes what we need to do about it.

The report, focused on mitigation, says that global greenhouse gas emissions were rising faster in the last decade than in the previously three, despite reduction efforts.  Without additional mitigation efforts, we could see a temperature rise of 3.7 to 4.8 degrees Celsius above pre-industrial times by the end of this century. The IPCC says we can still limit that increase to 2 degrees, but that will require substantial technological, economic, institutional, and behavioral change.

Let’s translate the numbers. For every degree rise, that equates to more risk, especially for the poor and most vulnerable.


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