Whenever we think of textile workers nowadays, we tend to think about cheap labor—particularly women sewing in overcrowded factories. In fact, the textile industry nurtures the narrative of how maquiladoras in the south have robbed manufacturing jobs from countries like the U.S., or how China has inundated the global market with cheap goods.
Macroeconomics and Economic Growth
The International School of Kenya just hosted its last football tournament of the year. Teams from Nairobi’s poor neighborhoods dominated the event. Rain was pouring and many of the players were playing barefoot, but they still thrived, outperforming many teams from schools where the rich take their children.
In the 10-11 age group, the top three places went to teams from destitute neighborhoods, including Kibera, which some people have (wrongly) dubbed as the world’s largest slum. Kibera Sports Academy stood at the top of the podium, while second and third places went to Inspiration Kenya and Peace Academy respectively.
Many people, including Kenyans, consider slums the epitome of misery. The common wisdom is they breed disease, crime and many other forms and manifestations of poverty. Why then are slums growing bigger, with people migrating to them in ever increasing numbers?
When we talk about growth, we typically focus on growth rates, and so if we were to look at which countries had the greatest percentage increase in GDP per capita over the last decade (at constant international prices according to the World Development Indicators), we would get a table like this:
In development circles, people talk about “countries that are too big to fail and too small to succeed”. The jury may be out on the former but a new book by Shahid Yusuf and Kaoru Nabeshima, “Some Small Countries Do It Better” dispels the notion that countries can be too small to succeed.
Three small countries studied in the book - SIFIRE (SIngapore, FInland, IREland) – not only grew at high rates but were able to sustain them.
The book – which concludes with a section on implications for African countries – contends that growth recipes for SIFIRE were not tightly bound to the East Asian model of extremely high rates of savings and investment (although arguably, Singapore was in many ways the epitome of that model, thanks to its mandatory savings scheme which led to gross national savings in the neighborhood of 50 percent for decades).
The larger point is that these three countries augmented physical investment with healthy doses human capital and knowledge; by “opening their windows and letting it [knowledge in various forms, for example, that embodied in FDI] stream in”. And even though the book does not explicitly discuss it, they did so without massive infusions of foreign aid. Or perhaps it was the lack of aid that forced them to be nimble, agile, and forward-looking?
What precisely did SIFIRE get right?
Recent data show that poverty is falling around the world. Today, 43 percent of people are considered to be living in “poverty” (on less than $2 per day), compared to 30 years ago when almost three-fourths of the developing world’s population was doing so.
On June 5, World Bank Vice President for Sustainable Development Rachel Kyte will host a live online chat about Rio +20 and sustainable development at live.worldbank.org. Submit questions now, and then join Rachel Kyte and economist Marianne Fay on June 5 at 14:00 GMT/10 a.m. EDT.
Rio +20 is coming up in a few weeks. Some 75,000 leaders, advocates, scientists and other experts are expected in person, and tens of thousands more will be watching online to see how the world can advance sustainable development.
Many of us have been advocating for greener, more inclusive growth since before the first Earth Summit at Rio 20 years ago. We’ve seen economic growth lift 660 million people out of poverty, but we’ve also seen growth patterns run roughshod over the environment, diminishing the capacity of the planet’s natural resources to meet the needs of future generations.
The growing global population needs world leaders to do more than just check in at the UN Conference on Sustainable Development, Rio+20 – it needs them to move the needle now toward truly sustainable development practices.
- South Africa
- The World Region
- South Asia
- Middle East and North Africa
- Latin America & Caribbean
- Europe and Central Asia
- East Asia and Pacific
- Urban Development
- Labor and Social Protection
- Social Development
- Science and Technology Development
- Public Sector and Governance
- Private Sector Development
- Macroeconomics and Economic Growth
- Financial Sector
- Communities and Human Settlements
- Agriculture and Rural Development
- Sustainable Development
- Natural Capital Accounting
Containers spend, on average, several weeks in ports in Africa. In fact, over 50% of total land transport time from port to hinterland cities in landlocked countries is spent in ports.
Our recent study demonstrates that, excluding Durban and Mombasa, average cargo dwell time in most ports in SSA is close to 20 days whereas it is close to 4 days in most large ports in East Asia or in Europe. In this setting, the main response has been to push for: (a) concession of terminal operators to the private sector, (b) investments in infrastructure (such as quays and container yards) and (c) investments in super-structures such as cranes and handling equipment.
What has been the result on cargo dwell time? Not much. On average, it is extremely difficult to reduce cargo dwell time. In Douala (Cameroon), for example, planners set an objective of 7 days at the end of the 1990s, but the dwell time remains over 18 days (despite real improvements for some shippers).
Recently, a friend from Indonesia visited me in Nairobi. He is one of the world’s leading experts on social development and a long-term Jakarta resident. One of his observations stuck in my mind: “Kenya is just like Indonesia ten years ago”, he said.
Comparing Kenya with Indonesia is counterintuitive—except perhaps when it comes to traffic jams—because of the many differences between the two countries. Indonesia is the world largest island state with more than 17.000 islands and a demographic heavyweight with 240 million people (six times more than Kenya). It is also 85 percent Muslim, while Kenya is about 85 percent Christian. Indonesia has massive natural resources – coal and gas (and some oil) – that it exports to other Asian countries, especially China, while Kenya’s economy is fuelled by a strong service sector.
There are many more reasons to challenge a comparison between these two countries but when one digs below the surface, there are also some similarities. Economically my friend was spot on: in GDP per capita terms, Kenya is roughly at the level of Indonesia a decade ago (about US$800 per capita). Today Indonesia is far ahead, but I don’t see any reason why Kenya couldn’t follow suit. Indeed, Indonesia is a good benchmark case for Kenya because it was never a “star reformer”, but instead a consistently strong performer.
Imagine a low-income country in the developing world suddenly discovering a large endowment of natural resources within its borders. Perhaps a large oil reserve is found just offshore, or a deposit of valuable natural minerals is uncovered just below the earth’s surface. Surely, such a discovery would be a blessing, as it would expand the country’s total stock of capital.
|The up-tick in market tensions following recent bank downgrades, partial nationalizations and elections have caused CDS rates to rise sharply, although in most countries they remain below their fall 2011 highs. Stock markets have also tumbled, exchange rates depreciated and the turmoil has contributed to falling commodity prices.|