Trade logistics, or the capacity of countries and companies to ship goods to international markets, is a key ingredient for economic competitiveness, growth, and poverty reduction. Poor logistics performance creates a deadweight loss for producers and consumers alike, and results in a net waste of resources. Improved trade logistics, on the other hand, would give a welcome boost to the economy at a time of fragile recovery from the global recession.
Macroeconomics and Economic Growth
South Asia is among the fastest growing regions in the world, but it is also home to the largest concentration of people living in conditions of debilitating poverty, human misery, gender disparities, and conflict. In my book, Reshaping Tomorrow, I ask if South Asia is Ready for the Big Leap.
The optimistic view is that India will achieve double-digit growth rates benefitting the rest of South Asia. The pessimistic view is that growth will be derailed by structural and transformational challenges. Which of these two outlooks will prevail?
The Optimistic Outlook
The optimistic outlook is based on favorable trends, including improved governance, the demographic dividend, the rise of the middle class, and the new faces of globalization.
All countries in the region have an elected government for the first time since independence leading to governance that is more focused on development. Improved governance will enhance the politics of democratic accountability; diminishing the importance of identity politics; and the rates of incumbency – the likelihood of a sitting politician being re-elected – are down.
Market confidence has been rattled once again following recent election results in France and Greece. However, credit default swaps rates, while up, remain well below their fall 2011 highs. Through March, retails sales have continued strengthening among both developing and high-income economies, although weakness still persists in the Euro Area.
Ever wonder how a World Bank flagship report gets written? A team of experts drafts an outline and shares it with stakeholders for their comments, suggestions and inputs. Based on this feedback, the team drafts the report and shares the draft for further comment, before publishing the final draft.
Today, we are proposing to write our flagship report on youth employment in Africa differently. We are launching a wiki platform and inviting the world to participate in the writing of the report. The wiki contains the preliminary outline which you can revise and rewrite. I emphasize that the outline is preliminary; it contains assertions that may not be borne out by further analysis (I know because I wrote some of them). So please add to, subtract from and edit the outline.
Why are we doing this? First, the topic of youth employment in Africa is so important that we need to engage as many people as possible in finding solutions. And second, young people are so tech-savvy that this may be a way of harnessing that talent and energy.
As you can imagine, the idea of writing a report on a wiki platform raised some questions, even from my teammates ("if you needed brain surgery, would you crowd source that too?"). But we decided that the benefits outweigh the risks.
And if we succeed in collaborating with a large number of people, we could call it the world's development report.
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'Made in Latin America'. Wouldn't that be a great label? --one that would slowly work its way out of the realm of some imaginary Latin American products to become a real seal of approval for many endeavors and accomplishments by the region.
I'm in Miami for the Seventh Annual Latin America Conference to talk about the region's prospects to decision makers, and I can't think of a better place to come up with such label --'My-ami', I muse, the Latin American economic and social melting pot that has been called many times the region's business capital.
Most people seem to think that intra-African trade could be substantially larger than it currently is. This would explain the recent statement of the heads of the African Union to “boost” intra-African trade substantially and to create an Africa-wide Free Trade Area by 2017.
A week hardly goes-by without one or more international investors announcingmajor investment interests in Nairobi, or other African capital cities.
Nokia, Nestle, and IBM are some of the companies which intend to position themselves more strongly in (East) Africa. True, their investments may still be low by international standards, but they are increasingly becoming noticeable.
On a macroeconomic level, the new Africa momentum has also been evident. Africa has weathered both the global financial crisis, and the turbulence in the Euro zone. According to World Bank’s latest economic outlook, Sub-Saharan Africa is projected to grow above 5 percent in 2012 and 2013. This would be higher than the average of developing countries (excluding China), and substantially, above growth in high-income countries. This means that at some point in this decade, Africa could grow above the levels of Asia. A few years ago, it would not have been possible for economic observers to consider such a scenario. Once Africa becomes the fastest growing continent in the world; this will also be the true turning point for Africa’s global perception.
UPDATE (May 15th, 2012) Caroline Freund, World Bank Chief Economist for the Middle East and North Africa has joined the debate. See her remarks.
The Chief Economists of all the regions where the World Bank implements programs got together recently to exchange thoughts about the current state of development economics.
You can read a summary of our views related to Africa, South Asia, and Europe and Central Asia here.
And we hope you can participate in this debate by sharing your own views via the comments section below.
Latest business surveys for the Euro Area suggest that the nascent recovery in activity in the region may be shortlived. Recent data suggests that Euro-Area deleveraging has had a negative impact on trade finance, but that trade finance availability should firm during 2012.
First, the good news: The world has become considerably less poor. Today, 43 percent of people are considered to be living in poverty—that is, living on less than $2 per day—compared to 30 years ago when almost three-fourths of the developing world was doing so. Even more heartening is that extreme poverty—that is, living on less than $1.25 per day to meet the most basic human needs—has declined even more.