This is the sixth of our series of posts by PhD students on the job market.
|Flows into the bond and equity funds of developing countries rallied in the second half of this year amid stabilization of financial markets and quantitative easing in high income countries. Following a weak second quarter due to financial market tumult, growth has picked up in the developing world, notably in China – although output growth slowed in India and South Africa due to country-specific factors. The strengthening of developing-country activity (and imports) has been reflected in a modest improvement in high income country growth, but the continuing weakness in the Euro Area, fiscal uncertainties in the United States, and weak Japanese sales to China have limited the overall improvement.|
|Foreign portfolio flows to developing countries rallied in the second half of 2012. Capital flows into emerging market bond and equity funds have picked up since July, in line with the general improvement in global financial conditions. After $9.6 billion exited equity funds in May/June, some $10 billion flowed in during September-November. Overall, net inflows for 2012 through end November reached $22 billion. This is a marked improvement from $41.2 billion outflow during the first 11 months of 2011, but only a third of the inflows in 2010. In comparison, flows to emerging-market fixed-income (bond) funds were relatively stable in the May/June period. Inflows into bond funds have totaled $61.6 billion in the year to date, more than twice the $25.7 billion in 2011 and surpassing the $60.2 billion received during the same period in 2010.|
|GDP growth for developing countries as a whole picked up in the third quarter, but weakened in a few due to country-specific factors. Partly as a result of stimulus measures and bolstered by improving US growth (see below), GDP growth in China picked up to a 9.1% annualized rate in the third quarter, up from 8.2% in Q2 and 6.1% in Q1. Russia’s growth also picked up to 2.3% in Q3, supported by a rise in crude oil prices (itself reflecting the strengthening of global activity). The pace of expansion in Brazil also improved, but remained modest at 1.3% (versus 0.8% in Q2). In contrast, mining tensions caused South Africa’s growth to slow from 3.4% in Q2 to 1.2% in Q3. In India, annualized GDP growth slowed from 5.8% to 3.8% as a result of delayed monsoon rains and weak industrial activity. In other developing countries, output growth accelerated from 3.7% in Q2 to 4.3% in Q3. Overall, GDP growth in developing countries remains 4 percentage points higher than in high income countries.|
|Following several quarters of deceleration, growth in high income countries has also started to improve, partly in response to an increase in developing country imports. Reflecting both weak Euro Area domestic demand and accelerating developing country imports, rising net exports moderated the annualized pace of GDP decline in the Euro Area from –0.7% in the second quarter to –0.2% in the third quarter. In the US, GDP growth strengthened to 2.7% in Q3, from 1.3% in Q2, as the housing sector started to rebound after years of consolidation. The recovery would have been stronger had uncertainty over fiscal policy not contributed to a decline in investment spending. In Japan, an end to earlier stimulus measures plus weak demand from China (in part due to island-related disputes) led to a 3.5% contraction in Q3 GDP. In other high income countries GDP growth picked up modestly to 1.5% in Q3 from 0.4% in Q2.|
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Indonesia is estimated to have the largest geothermal potential in the world – 27,000 megawatts, or roughly 40 percent of total global geothermal resources. But currently, only 4 percent of that potential is being used to produce electricity. Even at the current level of development, however, Indonesia is the third largest geothermal producer in the world in terms of installed capacity, following the United States and the Philippines.
“The World Bank is organizing an art show?” My neighbor seemed stunned. He has just got to know me, since I moved to India only in early September. To him I am the economist who moved to India from Washington. Quite possibly, he thinks I have come to India to try and tell the government what to do.
“Why?” He asked. I told him it was because we wanted to stimulate thinking about South Asia’s common future. “Why?” he insisted. I told him many other regions in the world have discovered that a common future brings better lives to citizens than separate futures. “Aha!” he said, “you want to promote free trade”. He thought he had recognized me again.
It was a most interesting conversation to me. The art show had not been my idea, but it felt very natural to me. After all, my wife is a painter and photographer, and I have therefore helped organize many art shows in the past. But this one is very different. It's a group exhibit by the winners of a competition we launched in all countries of South Asia.
This is the second in a series of six posts about the recent report, “Bangladesh: Towards Accelerated, Inclusive and Sustainable Growth”. The first post was Better Jobs Can Outweigh a Secure Life. Next week’s post will look at how Bangladesh’s economy has remained resilient despite global and local shocks over the past few years.
Bangladesh lacks natural resources and good governance. It is beset by natural calamities. Corruption and self-destructive political non-cooperation are common. Yet Bangladesh’s GNI per capita more than tripled in the past two-and-a-half decades, from an average of US$251 in the 1980s to US$851 by 2012. This growth was accompanied by impressive progress in human development. Growth in GNI came almost entirely from growth in GDP in the 1980s and 1990s, but this changed in the last decade due to a surge in remittances from Bangladeshi workers abroad. GDP growth has accelerated by a percentage point and per capita GDP growth has accelerated by 1.7 percentage points in each of the last four decades. A recently published World Bank report, “Bangladesh: Towards Accelerated, Inclusive and Sustainable Growth—Opportunities and Challenges” explains how Bangladesh managed to beat the odds.
Where did GDP growth come from?
- United States
- United Kingdom
- South Africa
- The World Region
- South Asia
- Middle East and North Africa
- Latin America & Caribbean
- Europe and Central Asia
- East Asia and Pacific
- Communities and Human Settlements
Pakistan’s population of nearly 181 million is growing at 2% per year; this population explosion has resulted in the country meeting the international definition of water stress—water availability in Pakistan has plummeted from about 5,000 cubic meters per capita in the early 1950s to less than 1,100 m3 per capita in 2011.
This ominous, mounting water paucity impairs the lives of Pakistan’s rural women, who bear the arduous responsibility of collecting and providing water for their households. The absence of a safe water supply at or near their homes—and the resulting need to walk up to 4 km or more to get water each day—has aggravated the burden of women’s duties in many ways, making them vulnerable in terms of both their health and personal safety.
Rural women are the worst victims of water scarcity; however, in some communities, evidence indicates that women are emerging as a “herald of change.”
On Nov. 7, 2012, a motorboat carrying 110 illegal immigrants heading for Malaysia capsized in the Bay of Bengal close to Bangladesh’s southeastern border with Myanmar. This tragedy came less than a fortnight after a boat with more than 135 passengers capsized in the same area. “Boat capsized with illegal immigrants from Bangladesh” is a recurring story, with Thailand, Malaysia, and other Southeast Asian countries the destinations of illegal work seekers. What makes Bangladeshis resort to such extreme methods of migration?
All climate negotiations have been based on staying below 2°C above pre-industrial temperatures. Yet it looks increasingly unlikely that that will be possible. A new report, Turn Down the Heat: Why a 4°C Warmer World Must be Avoided, suggests that there is a 40 percent chance that we will reach 4°C by 2100 even if we stick to the agreed emission reduction commitments.
What does water look like in a 4°C world?
Put simply: it's complex. Water is a complicated system and one of the major impacts of climate change is the effect on the hydrological (water) cycle. These impacts will coincide with an unprecedented increase in demand for water because of population and economic growth.
For a number of years, a majority of South Asians have been painfully aware that climate change is real and, if left unfettered, has the potential to reverse the significant gains the region has made on poverty reduction and other Millennium Development Goals.
In 2009, the government of the Maldives held a Cabinet meeting underwater to remind the world that the country – which is on average 2.7 meters above sea level – will be completely wiped out if oceans rise.
Nepal’s government held a Cabinet meeting at the base of Mount Everest – at an altitude of 5,242 meters above sea level – to stress that 1.3 billion Asians depend on the seven major rivers with headwaters originating from the vulnerable Himalayan glaciers for their livelihoods.
They both hold the potential to help meet the needs of the poor and end poverty. New ideas and innovative solutions are critical to address the 2.5 billion people who lack access to proper sanitation. Lack of access to clean water and sanitation kills more than 4,000 children a day and a lack of sanitation results in billions of dollars in economic losses to developing countries. Now that more people have access to a mobile phone than to a toilet or latrine, it’s time to leverage technology to help reach development goals.
A number of recent innovations have increased the scope of climate insurance available for rural communities. For example, by using rainfall or forage cover instead of individual assessments, farmers and pastoralists have the option of insuring a portion of their livelihoods. A range of schemes have been attempted to provide a similar level of coverage for out-of-pocket health expenditures to workers in the informal sectors.
Education is fine example of the strengths and weaknesses of judicial activism in India. The Right to Education (RTE) Act was passed in 2009, arising out of constitutional amendment in 1999 that redefined the right to life as including education (!). Private schools challenged the act, especially its requirement that they reserve 25% of places for lower castes, but the Supreme Court upheld it.
To see what all this means on the ground, I duck out of my boring conference and head for Madanpur, a colony for slum dwellers ‘rehabilitated’ in 2000 – i.e. their previous homes were steamrollered and they were shunted to the margins of Delhi. Its current population of 145,000 earns income from construction, domestic work etc – almost entirely in the informal economy.
Oxfam India’s partner, the slightly ungrammatical EFRAH (Empowerment for Rehabilitation, Academic and Health) is an RTE activist NGO working with schools to implement the Act – part support, part watchdog (‘they like us, and they are afraid of us’). There is plenty to work on, as the gap between the Act and reality is great: it mandates school management committees with equal teacher/parent representation, but there are none to be seen in Madanpur.
On my recent trip to India, I discovered some talented bloggers – here’s Bipasha Majumder, Oxfam India’s Communications Officer in Mumbai, writing in a purely personal capacity on the Great Middle Class Debate. She also writes a personal blog.
I have had discussions and I have had heated discussions. Sometimes I have just let the question float in the air, sat back and observed what others had to say.
Whichever way you look at it, one thing is very clear. The great Indian rising middle class is just not bothered. They are largely happy and keen to contribute to the ‘growing’ economy. But when it comes to any kind of contribution to a cause, especially those related to poverty, there is a big wall of apathy around them.
Photo: A teacher and school class stand at a cyclone shelter in rural Bangladesh. Stephan Bachenheimer/World Bank
Al Gore’s Climate Reality Project launches its “24 hours of Reality: Dirty Weather Report” today. It’s a global online multimedia event that seeks to demonstrate how climate change is manifesting itself around the world, showcasing countries, communities and individuals leading through innovative solutions.