I recently visited a math classroom in Frumusani, Romania, where half of the students are Roma. It's critically important for all countries to invest in education in order to stay competitive in the global economy. That means education for all, including communities such as the Roma that have long faced discrimination. Please watch the video to hear more.
Photo: ElishaCasas, Flickr Creative Commons
An increasing number of countries are developing national strategies for financial education and implementing programs to enhance people’s financial capability. At least 36 countries have already established or are in the process of designing a national strategy for financial education according to the OECD. Boosting people’s ability to take sound financial decisions has emerged as a new policy objective, both in developed and developing countries. The recent financial crisis has reinforced the view that being financially capable is important. However, let’s take a step back. What do we know about how capable people are in different countries across the world in managing their finances? Which knowledge and skills gaps exist that could be filled with financial capability enhancing programs? Which populations are the least financially knowledgeable and capable and would benefit the most from any interventions?
Eleven of the less prosperous members of the European Union – Bulgaria, Croatia1, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, the Slovak Republic, and Slovenia (EU11)—have remained attractive destinations for Foreign Direct Investment (FDI). The Czech Republic, Estonia, and Slovakia witnessed FDI levels in 2012 similar to pre-crisis levels. Poland and Bulgaria also experienced large gains in FDI in 2012.
Financial Markets…Global stock markets fluctuated between gains and losses, following three consecutive days of losses last week, as strong Chinese exports data in October offset worries over a prospect of the so-called U.S. fiscal cliff and Greek woes. The benchmark MSCI global equity index just slipped 0.04% in afternoon trading.
Spanish government bonds declined on Monday, pushing the benchmark 10-year yield to 1-month high of 5.88%, as European finance ministers prepared to discuss Greek aid amid growing concerns that the region’s debt crisis remains unsolved. The country’s 2-year borrowing costs also rose, climbing 9 basis points to 3.21%.
The Greek government announced on Monday that the nation’s banks will recapitalize by issuing stocks and convertible bonds and must meet a core Tier-1 capital adequacy ratio of minimum 6%. According to the recapitalization terms, the shares will be sold at a discount and the bond will carry a 7% annual coupon rate with a 0.5% increase per year.
China will further expand its quota for Renminbi Qualified Foreign Institutional Investors (RQFII) to US$80 billion from US$30 billion. This will allow the qualified foreign investors to use offshore yuan funds for investing in the country's capital market.
High-income Economies…Japan’s GDP contracted 0.9% (q/q) and fell at an annualized 3.5% (q/q) pace in the third quarter of 2012, the first such decline in three quarters. Slowing global growth and a territorial dispute with China (Japan’s largest trade partner) resulted in a 5.0% (q/q) drop in Japan’s exports in Q3, accounting for 0.7 percentage points of the 0.9% output drop.
The OECD’s composite leading indicators suggest signs of stabilization in the US, Canada, and China in September, with the index for the US rising to 100.9 from 100.8 in August, and Canada’s and China’s unchanged at 99.7 and 99.4 respectively. However, the Euro Area faces weaker growth prospects as leading indicators for the two largest Eurozone economies, Germany and France, fell, while prospects for Italy improved.
Germany’s wholesale price inflation rose to 4.6% (y/y) in October from 4.2% in September, mostly due to base effects. On a monthly basis, however, the index fell 0.6% (m/m), as a fall in fuel and mineral oil prices (driven by a drop in crude oil prices) offset a monthly increase in food prices.
Estonia’s GDP rose by 1.7% (q/q) in the third quarter of 2012, with year-on-year growth accelerating to 3.4% (y/y) from 2.2% in the second quarter. Construction, information and communication activities contributed the most to the GDP expansion.
Developing Economies…China’s October export growth accelerated to 11.6% (y/y) from 9.9% in September. October imports were up by 2.4% y/y – unchanged from September. China's October trade surplus increased to US$31.99 billion from September’s $27.67 billion. China's October bank lending eased to 505.2 billion yuan from September’s 623 billion yuan and M2 growth also slowed down to 14.1% (y/y) from September’s 14.8%.
India's industrial output contracted by 0.4% (y/y) in September compared to a 2.7% (y/y) growth in August, largely on account of a 12.2% decline in the capital good production. Meanwhile, the country's trade deficit hit a record high $20.96 billion in October with exports falling by 1.63% (y/y), while imports rose by 7.4%.
Mexico's industrial output revived in September growing at 0.9% (m/m) compared with a 0.8% contraction in August following a pick-up in US industrial activity and on the back of strong performance in manufacturing. Mexico’s industrial growth on an annual basis at 2.4% (y/y) in September is still below a 3.6% increase recorded in August.
Peru recorded a trade surplus of US$403 million in September after falling into a US$52 million deficit in August.
Romania's annual inflation slowed to 5% (y/y) in October from 5.3% in September on lower pace of increase in food prices. Inflation rate is still above the 2-4% annual target.
Russia’s GDP growth slowed to 2.9% (y/y) in the third quarter compared with a 4% growth in the second quarter, on weak external demand and a poor harvest related to a severe drought.
Imagine you need a car to commute long distances to your workplace or the closest supermarket, to visit your parents and to bring your child to school. Therefore, you want to spend the money you have been able to put aside on a large purchase: a new and reliable car. However, you do n
ot know how to drive, nor how do you have even a basic understanding of any technical aspects of a car, not to mention any knowledge about how to maintain a car.
Also, imagine that everything you have heard so far about car dealers from your family, friends and neighbors is that they have a very bad attitude, do not act in your best interest and try to sell you overpriced vehicles with hidden fees and features you do not need. Given your lack of knowledge of how to choose and use a car and your lack of trust, would you still feel confident about approaching a car dealer? Most probably not.
This analogy also applies to one’s participation in financial markets. Especially in developing economies, where most globally unbanked people live. If you do not have knowledge of features and risks associated with financial products, do not know how to choose and use these products, lack any basic understanding of inflation, interest rates and compound interest, it is unlikely that you will participate in financial markets, or that you will benefit from them if you do. A lack of trust in financial service providers will do the same.
Important developments today:
1. European sovereign credit risk rises to eight-week high following Greek debt swap insurance payouts
2. Italy in recession
Also available in: Русский
When healthcare professionals take the Hippocratic Oath, they promise to prescribe patients regimens based on their “ability and judgment” and to “never do harm to anyone”.
Although extraordinary progress in medical knowledge during the last 50 years, coupled with the development of new technologies, drugs and procedures, has improved health conditions and quality of life, it has also created an ever-growing quandary regarding which drugs, medical procedures, tests and treatments work best.
And for policy makers, administrators and health economists, the unrestrained acquisition and use of new medical technologies and procedures (e.g., open heart surgery to replace clogged arteries, ultrasound technology scanners to aid in the detection of heart disease, and life-saving antiretroviral drugs for HIV/AIDS) is increasing health expenditures in an era of fiscal deficits.
In many countries, I’ve see how ensuring value for money in a limited-resources environment is not only difficult but requires careful selection and funding of procedures and drugs. It also comes with serious political, economic and ethical implications—and with new drugs and technologies appearing every day, this challenge isn’t going away. What should countries do?
Important developments today:
1. Greek bond yields climb over 90% for the first time
2. U.S. manufacturing continues expanding
Studies have revealed a strong correlation between quality of education and increased corruption in a country. According to a Transparency International report, data collected to track progress in education in 42 countries showed that the practice of paying bribes is associated with a lower literacy rate among adolescents. Corruption is also linked with increased inequality in the quality of education between the rich and the poor. When resources allocated for public education is inadequate or do not reach the schools, it is the poor who bear the brunt. Unlike the rich, who can afford private tuition for their children, the poor have to depend on the government.
| China posted strongly positive real GDP growth in Q3-2010, fueled by a rapid expansion in domestic demand. The government has responded to signs of tightness, including a firming of inflationary pressures, by hiking policy rates—although real interest rates remain slightly negative. Reflecting the slowdown in industrial output mid-year, world oil consumption decelerated in Q3-2010. Nevertheless, oil prices have firmed since late-September, largely due to US-dollar weakness and investor search for yield. Based on latest available year-to-date data, FDI inflows to developing countries are expected to rise 17% in 2010 on a revival in M&A, supported by low funding costs. In contrast, FDI flows to high-income countries are expected to fall 4%, reflecting weaker short and medium-term growth prospects. | |
| China reported vibrant 9.6% y/y real GDP growth in Q3-2010, despite policy normalization. he overall growth figure reflects strong domestic demand and is consistent with a pick-up in industrial production (7.9% in Q3, q/q, saar) following the pause in growth in the summer (3.9% in Q2). Robust retail sales and PMI surveys in September also underscore vibrant domestic activity. Inflationary pressures have picked-up slightly to 3.5% in Q3, up from 3% in the previous two quarters (q/q, saar). The contribution of net exports to growth was likely negative in Q3—with goods export growth slowing sharply to 4.1% from 33% in Q2, while imports rebounded to 9% after declining 7% in Q2 (volumes, q/q, saar). This better-than-expected performance is likely to be reflected in an upward revision to the Bank’s forthcoming growth forecast for China1. |  |
| World oil demand declined in Q3-2010, in line with the slower pace of the recovery and efforts in China to improve energy efficiency. Global demand increased 0.4mb/d, just somewhat stronger than its average increase of 0.33mb/d during 2000-2007. For the year as a whole, oil demand is projected to average 87.3mb/d, about 1% above the 2007 pre-crisis peak. Despite the slower demand growth and still ample spare capacity, the price of oil has risen—from $76/bbl in Q3-2010 to $81/bbl (as of October 28, simple average of Brent, Dubai and WTI)—partly reflecting the depreciation of the US-dollar and financial investor interest. |  |
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FDI flows to developing countries (LMICs) are expected to rise 17% in 2010. The pick-up reflects both stronger M&A and Greenfield investment, and was likely supported by low funding costs in high-income countries (HICs) due to quantitative easing. Particularly large gains were recorded in East Asia and Pacific (China, Indonesia, Malaysia) and Latin America (Chile, Mexico). Europe and Central Asia (Bulgaria, Romania) and South Asia (India) saw slight declines in flows. FDI flows to HICs appear to have declined 4% since 2009 on sovereign debt concerns and weaker short and medium-term growth prospects. The aggregate figure reflects large divestments from some countries (Belgium, Iceland, U.K., Ireland). Overall, LMICs’ share of FDI flows is estimated to have increased to 37% in 2010—up more than three-fold since 2000. FDI flows to HICs and LMICs remain 60% and 30%, respectively, below their respective pre-crisis peak flows (posted in 2007 and 2008). 1China Quarterly Update, November 2010 (scheduled to be released in early-November). |
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Despite increasing attention to the impact of ICT on teaching and learning in various ways, the ICT/education field continues to be littered with examples of poor evaluation work. A few of them arrive in my in-box every week.
There are many potential reasons advanced for the general poor quality of much of this work. One is simple bias -- many evaluations are done and/or financed by groups greatly invested in the success of a particular initiative, and in such cases findings of positive impact are almost foregone conclusions. Many (too many, some will argue) evaluations are restricted to gauging perceptions of impact, as opposed to actual impact. Some studies are dogged by sloppy science (poor methodologies, questionable data collection techniques), others attempt to extrapolate finds from carefully nurtured, hothouse flower pilot projects in ways that are rather dubious. (The list of potential explanations is long; we'll stop here for now.)
