With oil in Niger and Uganda, natural gas in Mozambique and Tanzania, iron ore in Guinea and Sierra Leone―African countries are increasingly finding rich new deposits of oil, gas, or minerals and just as quickly, attracting the courtship of international companies that are drawn to Africa’s new bonanza in extractives wealth.
Much of the G20’s agenda following the global financial crisis has been focused on crisis response—on short-term crisis management and recovery. In the aftermath of a major crisis, economic stabilization of course is the first order of business. And the G20 has done reasonably well in that respect. But economic stabilization alone will not restore strong and sustained growth, as global growth faces deeper structural challenges.
In advanced economies, some of the structural weaknesses have accumulated over time, such as the labor market rigidities in Europe, the deficiencies in tax and expenditure structures and associated fiscal problems in a broad range of advanced economies, including the US, and the challenges arising from ageing populations. The global financial crisis has added to these challenges by causing supply-side disruptions that lower potential growth, including the destruction of capital stock, financial sector dislocations, and increases in structural unemployment—as well as adding to the fiscal woes. Challenges also arise from a changing pattern of competitiveness and comparative advantage as emerging economies increasingly penetrate global production and trade. So future growth in advanced economies will require not just supporting a recovery of demand but also a reallocation of resources to new sources of growth—new products, new services, new jobs.
While global economic growth has been sluggish in recent years, Africa has been growing. We’ve seen a resurgence of traditional sectors such as agriculture and the extractive industries as well as promising new ones such as ICT. Not surprisingly, these booming sectors need highly skilled technicians, engineers, medical workers, agricultural scientists and researchers. Yet large numbers of African graduates remain unemployed as their skills are often not in line with industry requirements.
New developments and curiosities from a changing global media landscape: People, Spaces, Deliberation brings trends and events to your attention that illustrate that tomorrow's media environment will look very different from today's, and will have little resemblance to yesterday's.
This week's Media (R)evolutions: Mobile Growth Rates by Region
The Yangon Circular Railway is the local commuter rail network in Yangon, Myanmar. In this recording, World Bank Country Manager Kanthan Shankar boards the train on a three-hour ride around the city. "You see a panorama of life unfolding before you and you feel a part of the picture," he says, reflecting on the daily lives of the people in Yangon, "There's a huge opportunity for commerce and private sector growth. Yangon and Myanmar is lucky that it has basic infrastructure in place. It's a matter of rehabilitating these and aiming for a smoother ride to pave the way for commerce,"
Incomes in the poorest two quintiles on average increase at the same rate as overall average incomes, according to a new working paper by David Dollar (Brookings Institution), Tatjana Kleineberg and Aart Kraay. In a global dataset spanning 118 countries over the past four decades, changes in the share of income of the poorest quintiles are generally small and uncorrelated with changes in average income. The variation in changes in quintile shares is also small relative to the variation in growth in average incomes, implying that the latter accounts for most of the variation in income growth in the poorest quintiles. These findings hold across most regions and time periods, as well as conditional on a variety of country-level factors that may matter for growth and inequality changes. This evidence confirms the central importance of economic growth for poverty reduction and illustrates the difficulty of identifying specific macroeconomic policies that are significantly associated with the relative growth rates of those in the poorest quintiles. This reprise of Dollar and Kraay's earlier work also looks at the World Bank's new "shared prosperity" goal by considering the income growth rates of the poorest 40% of the population in each country in addition to looking at the poorest 20%.
The results suggest strangely mixed conclusions. In certain ways, poverty trends in Nigeria over the past decade were better than has been widely reported, where a story of increasing poverty has been the consensus. And yet poverty is stubbornly high, disappointingly so given growth rates.
Three facts stand out.
'Why is China Ahead of India? Implications for Europe and the US,' was the topic of a talk yesterday at the World Bank by Nobel winner Amartya Sen which was chaired by Kaushik Basu. In the span of just under two hours, Sen managed to pinpoint India's main Achilles Heel (primarily related to the low overall quality of education, poor health care and skewed energy and other subsidies), while weaving in references to Kido Takayoshi, Mao Zedong, David Hume, Mahatma Gandhi, Adam Smith, Jon Stuart Mill, Milton Friedman, Keynes, Marx and other thinkers and influencers.
Amartya's talk coincided with the publication of a New York Times op ed titled 'Why India Trails China' in which he stressed that one cannot wait to fix health and education only after reaching some modicum of overall prosperity. Indeed, proper health and education, which foster human capabilities, are an essential precondition to sustainable growth and the ability to compete successfully in an integrated world. India still needs to take these East Asian lessons fully on board.
The Chinese economy has changed dramatically over the last three decades. While its per-capita income was only a third of that of Sub-Saharan Africa in 1978, it has now reached an upper-middle income status, lifting more than half a billion people out of poverty. The numbers are dramatic: per capita income has doubled for more than a billion people in just 12 years. What was once a primarily rural, agricultural economy has been transformed into an increasingly urban and diversified economic structure, with decentralization and market-based relations rising relative to the traditional government driven command-based economy.
A helpful way for young math students to grasp the concept of exponential growth is to look at water lilies growing on a pond. They grow exponentially and double in area each day. If they will fully cover the pond by the 30th day, on what day is the lake half covered? The twenty-ninth day.
This year I had the honor of teaching 4th year energy systems students who will graduate later this month (their blogs on energy issues will be presented on this site over the summer). These graduates are particularly essential. During their careers they will be part of the world’s largest ever city-building spree. Their task will be to again double the world’s cities.