The year 2016 was difficult for many countries. We estimate that global economic growth slowed from 2.7% in 2015 to 2.3% in 2016. High-income economies struggled with subdued growth and low inflation amidst increased uncertainty about policy direction in light of rising populism. Among emerging markets and developing economies, commodity exporters were most affected by the end of the commodity price boom, growing by only 0.3%—much in line with our estimate of 0.4% growth for South Africa, the lowest growth rate since the 2009 recession after the global financial crisis. By contrast, commodity importers carried the torch of global growth in 2016, expanding by 5.6%.
In pursuing meaningful sustainable development, and investing in conservation and redressing the environmental damage caused by decades of neglect, we need to better explore and understand the role of international cooperation and why human values and ethics are central to this debate.
International cooperation. A key ingredient for generating a sustainable development path will have to be a significant strengthening of the current mechanisms of international cooperation, which have turned out to be insufficient to meet the global challenges that we face. The process of globalization is unfolding in the absence of equivalent international institutions to support it and harness its potential for good.
Recently, a discussion erupted over our paper and the so-called “elephant graph”. This graph (reproduced below) is the anonymous growth incidence curve, which shows how each percentile of the global income distribution has grown between 1988 and 2008. The discussion was sparked by a report by the Resolution Foundation’s Adam Corlett. Whether or not this was Corlett’s intention, some commentators have used his results to (erroneously) claim that our empirical results are not robust and/or that the policy implications drawn from our research are unwarranted – for example, see this Financial Times article.
If you have been listening lately to Robert ‘Bob’ Gordon, an economics professor at Northwestern University, he will tell you that the days of great inventions are over. This in turn, has led to a significant slowdown in total factor productivity – a measure that economists use to measure innovation and technical progress. Falling productivity is one of the main reasons for growth shortfall in advanced economies like the United States.
Eager to know more about this seemingly worrisome and pessimistic thesis, which has attracted a lot of attention among economists and the media, we invited Gordon to give a talk at the World Bank.
Oxfam number cruncher Deborah Hardoon tries to get her head round something weird – according to the stats, the poorest half of the world is getting poorer even though the incomes of these people are rising.
It has become something of a tradition that in January every year we take a look at the Forbes list of billionaires and the Credit Suisse Global Wealth databook and calculate how many billionaires it takes to have the same amount of wealth as the bottom 50% of the planet. Since we started doing these calculations, we have watched the wealth of the top grow at the same time as the wealth of the bottom 50% has fallen. The data tells us that the bottom 50% have approximately $1 trillion (that’s $1,000 billion) less wealth than they did 5 years ago, whilst the richest 62 have about $0.5 trillion more.
The extremely wealthy are able to accumulate more wealth in a day than a whole factory full of workers could earn in a year. On 21stApril, in a 24 hour period, Carlos Slim made more than $400 million. Thomas Piketty famously points out that the rate of return on capital is higher than the general growth rate, such that capital owners are at a distinct economic advantage.
Meanwhile those 3.6 billion people in the bottom 50% include people in debt, people with nothing and people with a net wealth of up to about $5,000. People with little, no, or negative wealth, especially in developing countries with poor social insurance mechanisms (four out of five people in the bottom 50% live in Africa or Asia – including China and India), will not only find it hard to respond to financial shocks – like a poor harvest or a medical bill, but will also find it much harder to invest in their families’ future. Having little wealth may be concerning, but having less and less wealth year to year is even more worrying.
Ed: This guest post is by Professor Eric A. Hanushek, a Paul and Jean Hanna Senior Fellow at the Hoover Institution of Stanford University. Join us online on January 28, 2016 to listen to Prof. Hanushek as he discusses his latest book “The Knowledge Capital of Nations”.
In September 2015, the United Nations adopted an aggressive development agenda that included 17 separate Sustainable Development Goals (SDGs) designed to guide investment and development over the next 15 years. Two of these assume particular importance because they will determine whether or not the other 15 can be achieved.
Firmin gets by doing small odd jobs. One day he is a street vendor, the next day a carpenter, and on other days he’s a gardener. He arrived in Abidjan two years ago with high hopes of joining the National Police Academy. His story resembles that of thousands of Ivorians who join the domestic workforce each year. Today, there are about 14 million people of age to work in the country, and by 2025, there will be approximately 22 million - all of whom seek a secure well-paying job.
If you are curious to know which country has achieved double digit growth in the last 12 years, making it the fourth fastest-growing in the world, the answer is Ethiopia. And what is more striking is that if Ethiopia sustains its current pace of growth, it will become a middle income country by 2025.