“What are you waiting for? Get out there and create your future”. This conveys the spirit of Mohammed Yunus’ lecture last week at the World Bank. His messages on social business and entrepreneurship raised a number of questions as to how we think about education, skills, employment and the future prospects of youth in the world.
Beyond the cold calculus of GDP and TFP and FDI, development is about promoting strong societies as well as propelling powerful economies. But how can we measure societies’ progress toward success? Some may try to calculate “Gross National Happiness” as a yardstick, and some may envision “getting to Denmark” as the ideal end-of-history destiny of development – but are there patterns that reveal how societies can flourish?
Two recent Washington seminars suggest that – by pursuing innovation and inclusion, and by focusing on broad-scale social “well-being” – policymakers can define realistic paths toward development success.
The methodologies used by Harvard economist Philippe Aghion at an International Monetary Fund forum and by former World Bank strategist Enrique Rueda-Sabater at a Center for Global Development discussion may have been different, but their conclusions were in harmony: Societies thrive – in a sustainable way – when inclusion and innovation help expand the circle of opportunity, and when strong governance standards lead to sound civic decision-making.
Taken together, the two seminars’ insights should help inform policymakers’ debate about the Sustainable Development Goals, which are due to be approved in September at the opening of the United Nations General Assembly.
Aghion, at an IMF seminar (sponsored by its Low-Income Countries Strategy Unit) on June 30, approached the topic of “Making Growth Inclusive” by imagining “how to enhance productivity growth while promoting social mobility.” Presenting data from a recent paper on “Innovation and Top-Income Inequality,” which he recently co-authored with an all-star team of economists, Aghion outlined the way that income and wealth inequality have drastically soared in developed countries since the mid-1970s – analyzing trends that by now are sadly familiar to the squeezed middle class, as calculated in the esteemed work of Thomas Piketty, “Capital in the Twenty-First Century.”
Building on that data, Aghion took the inequality-and-inclusion logic several steps further. He lamented the way that “skill-biased technological change” has (in the absence of policy safeguards) provoked societies to stratify along the lines of wealth, income, education and connections. Yet “creative destruction” is inevitable in “a Schumpeterian world,” reasoned Aghion: A significant factor expanding the wealth gap is the same process of continuous economic renewal that helps economies advance. “There is a big [economic] premium to being a superstar innovator,” he asserted, noting that “you can become rich by innovating” – and thus “innovation is a big part of top-1-percent income inequality.”
“Creative destruction is good for social mobility” and broader inclusion, in the long run, because it causes a steady procession of “new innovators to replace old incumbents.” The effect of each wave of innovation is fleeting, especially in a hyperspeed economy: “You get temporary ‘rents’ when you innovate. You don’t get them forever,” because the relentless Schumpeterian process will eventually cause yesterday’s innovators to become, in turn, tomorrow’s has-beens.
The darker danger of entrenched inequality occurs, said Aghion, when incumbent interests use their political power to lobby for the protection of their advantages – whether by pleading for tax-code favors, seeking government-imposed barriers to the entry of new competitors, or purchasing influence with pliant politicians through campaign donations. (In an aside on U.S. politics, Aghion pointed to his paper’s data linking a state’s representation on the congressional Appropriations Committees with its amount of federal favors – a shrewd quantification of the pork-barrel compulsions of Capitol Hill.)
Because innovation promotes social mobility and thus greater inclusiveness, Aghion contended that “innovation is a good guy; lobbying is a bad guy.” So “if you’re for inclusive growth, then you will be against lobbying and [the creation of] entry barriers.”
Focusing simply on present-day inequality is less informative than focusing on social mobility, he asserted. There’s nothing wrong with an economy that bestows ample financial rewards upon genuine innovators who create new products and processes. There is, however, something deeply wrong – and economically growth-inhibiting – with governments that allow no-longer-innovative incumbents to use their political connections to suppress potential competitors.
The IMF panel’s respondents amplified Aghion’s analysis. World Bank economist Daniel Lederman noted that it would be wise to use “the lexicon of ‘inequality of opportunity’,” because some degree of wealth inequality is inevitable (and perhaps even desirable) when individuals’ talent and effort are rewarded with rising incomes. IMF economist Benedict Clements – deploring the “great degree of disparity in ‘equality of opportunity’ ” that now prevails in advanced economies, including the United States – noted that there need be “no conflict between equity and efficiency if you design your policies right.”
Getting policies right – by upholding strong standards of governance – was also one of the underlying themes at a July 21 seminar at the Center for Global Development led by Rueda-Sabater, who is now a senior advisor to the Boston Consulting Group and a visiting fellow among CGD’s strong lineup of scholars. Rueda-Sabater is well remembered at the World Bank for leading a research team’s detailed “scenario planning” analyses that, in 2009, discerned the contours of three possible scenarios for the world in the year 2020.
Presenting a recent BCG report, “Why Well-Being Should Drive Growth Strategies,” Rueda-Sabater outlined an imaginative BCG diagnostic tool: the “Sustainable Economic Development Assessment” (SEDA), which measures the relative well-being of 149 countries by gauging their success in converting wealth into well-being – that is to say, in effectively translating their potential into tangible progress.
Much is made of the need for 'innovation' in education. Bullet points containing words like 'disruption' and 'transformation' increasingly characterize presentations at big education gatherings -- especially in North America, and especially where educational entrepreneurs and 'Silicon Valley-types' are to be found. The popular press is replete with (sometimes breathless) articles about the 'revolutionary' potential of some new technology to impact teaching and learning in ways that are often quite exciting. Indeed: There can be little doubt that the increased diffusion of low(er) cost, (more) powerful, connected IT devices across and within communities offers exciting possibilities and potential to do things differently -- potentially in a good way.
For many people, the use of technology in education constitutes a de facto 'innovation'. Whether or not this belief is actually accurate, or useful, is a legitimate question for discussion. That said, there is no denying that many of the educational innovations celebrated (or at least touted) today are enabled by the use of such technologies in some way.
Around the world, there few more conservative and traditional sectors than those related to public education. In many ways this is totally understandable, and appropriate. Investments in education represent investments in the future -- of our children, of our future citizens and workers and leaders and community members. We don't want to gamble with or experiment with the way we educate our children and try out too many new things, or so goes one line of thinking. The potential downside, or failure, carries with it consequences that are just too great.
And yet: We know that, for millions children around the world, the education they are getting today isn't actually all that great. Some frightening stats from just one page of the latest Global Monitoring Report [pdf], drawing on recent research from RTI:
- In Nicaragua in 2011, around 60% of second-graders could not identify numbers correctly and more than 90% were unable to answer a subtraction question.
- In Malawi, 94% of second-graders could not respond correctly to a single question about a story they read in Chichewa, the national language.
- In Iraq, 25% of third-graders were unable to tell the sound of a letter in Arabic.
And if you think that the situations in certain education systems are bad: Around the world, many children and adolescents -- 124 million, according to the latest figures from UNESCO -- are out of school and not getting any formal education at all.
In many cases then -- too many -- education systems aren't actually working all that well. In others -- like the global 'high performers' that are regularly held up as 'best practice' examples for other countries to emulate (Finland, Shanghai, Korea, Singapore) -- there is the danger that what worked well in the past (or what appears to be working well now) might not work so well in the future. The future is changing -- shouldn't we change the way we prepare for it? The riskiest course of action might well be one where people and institutions don't take risks.
Where business as usual is decidedly not working today,
or where it is feared that business as usual may not work tomorrow ...
what are some examples of business unusual from which
we might draw inspiration -- as well as practical insight?
Many good examples of this sort are regularly cited from experiences in highly developed, industrialized economies of North America, Europe and East Asia. No doubt much can be, and will be, profitably learned from what is happening such places. That said, the challenges facing education systems and families around the world are particularly acute where the needs are greatest: in many low- and middle-income countries, and especially within remote communities and traditionally disadvantaged populations.
Examples of 'innovation in education' from such places might just be more relevant to policymakers in Phnom Penh or Quito than are ones which originate in, say Palo Alto or Cambridge. (And, it is perhaps worth noting, that, if you believe that innovation often arises 'at the edges', where constraints compel people to be inventive in their approaches to solving problems in ways that folks in more resource-rich environments may never consider, it may just be that policymakers in Paris and Canberra may learn something to learn from what's happening in 'developing countries' as well.)
What examples do we have of innovative uses of educational technologies in such places?
Since childhood, Gircilene Gilca de Castro dreamed of owning her own business, but struggled to get it off the ground. Her fledgling food service company in Brazil had only two employees and one client when she realized she needed deeper knowledge about what it takes to grow a business. To take her business to that next level, she found the right education and mentoring opportunities and accessed new business and management tools.
- financial inclusion
- International Finance Corporation
- Goldman Sachs
- Small Businesses
- Overseas Private Investment Corporation
- Career & Money
- Income Inequality
- Gender Gap
- Private Sector Development
- East Asia and Pacific
- Latin America & Caribbean
- Congo, Democratic Republic of
- United States
Women entrepreneurs in Ethiopia are disadvantaged from the start. They have less access to the finance, networks, and education which help their male counterparts advance. They face regular discrimination and harassment from society--sometimes even from their own families and communities. The challenges a woman entrepreneur in Ethiopia faces in growing her business are overwhelming.
Rwanda’s level of financial inclusion is fast increasing, propelled forward by ambitious targets and innovative policy and regulatory approaches. The 2008 and 2012 FinScope surveys showed that financial inclusion had doubled from 21 to 42 percent and the 2015 iteration is expected to show continued progress. But with such a large and rapid movement of adults into the formal financial sector, ensuring that the ‘newly banked’ are able to effectively and responsibly select and use financial products is critical.
Traditionally innovation and entrepreneurship are seen as drivers of jobs and competitiveness, however we think it can also be an important driver of inclusiveness and social development.
We see how private actors are driving social development – the example of the Development Marketplace and its spin-off Social Enterprise Innovations program demonstrate the potential for scaling inclusive businesses, grassroots innovations and social entrepreneurship to solve development challenges like sanitation, clean water, early childhood nutrition, health-care services, and many more. We have examples in our portfolio of how social enterprises are delivering low cost TB treatments in poor communities, delivering clean water to urban and rural poor, and offering education opportunities to girls.
A new phase of openness began five years ago on July 1, 2010, when the World Bank launched its Policy on Access to Information, which provides access to any information in the Bank’s possession that is not on a list of exceptions. The policy has served as a catalyst and has created an ecosystem of transparency initiatives to make World Bank information and data available to the public. In the years since 2010, the Bank has applied the principles underpinning Access to Information to accompanying initiatives such as Open Data, the Open Knowledge Repository, Open Finances, and Open Contracting, among others. The spectrum of transparency and innovation even extends beyond these initiatives to include the World Bank’s vision on Open Government.
Open approaches are paramount to development. But while access to information and technology are important to the development process, they are only part of the equation in finding solutions. A crucial part of the process lies with global citizens who can – and do – utilize the information and data to engage with and better their communities.
Let’s say on a dark, cold day, electricity supply to your house is suddenly interrupted. With no heat and light, you furiously walk to the nearby government energy administration office to file a complaint.
As you file your complaint, an official also asks for your mobile number and tells you that within the next 24 hours, you will receive help. A day later, you get a text message or robocall asking you whether you have been helped and how the service was.
This process—when government proactively seeks feedback directly from citizens about the quality of its services and makes it mandatory for service providers to use smartphones and creates dashboards for citizens to view real-time information on service delivery—is called proactive governance.
Proactive governance was first introduced in 2011 in Punjab, the most populous province of Pakistan.