The term “sustainable transport” evokes a wide range of images and perceptions among transport professionals and lay people alike. For some, it means a range of technology solutions – from diesel particulate filters to ebikes, Copenhagen wheels, or buses running on compressed natural gas. For others, the term can refer to changes in behavior, like improving the way vehicles are maintained or driven, or efforts to carpool. For yet others, the term implies even more radical changes, like wholesale shifts in the way cities are designed, and/or smart city approaches that use ICT technologies to fundamentally change the way people interact with their surroundings. “Sustainable Transport” can mean any or all these things, including expanding access to transport services in rural areas.
But however the term is interpreted, it is not normally associated with Africa. Indeed, in many respects, common images of African transport are synonymous with unsustainability – high rates of traffic growth and congestion (even in cities with comparatively low motorization rates), high traffic injury and fatality rates from substandard road safety practices, highly polluting vehicles, minimal formal public transport services, poor enforcement of road worthiness and vehicle overloading– and the list could go on.
It is then very telling that the inaugural conference of the Africa Sustainable Transport Forum took place in Nairobi, Kenya in late October, with not only a great deal of interest but also high-level participation (with delegates from 42 African countries, including 25 Ministers). The conference was hosted by the Kenyan government, with support from the World Bank-led Africa Transport Policy Program (SSATP) and the United Nations Environment Program (UNEP). The Ministerial portion of the conference was opened by both President Kenyatta and Secretary General Ban Ki Moon.
Over three days, technical experts and ministers discussed what transport sustainability means for the continent, resulting in the first ever Sustainable Transport Action Framework for Africa. There were a number of other “firsts” associated with the conference: the first time African transport and environment ministers gathered together to discuss transport issues; the first time that “sustainability”, as a key objective of transport policy in Africa, was the focus of the agenda; and the first time that a Secretary General of the United Nations had ever opened an international conference focused on transport.
Governments in the Arab world have long subsidized the price of energy. This gives citizens throughout the region access to cheap petrol and diesel, and electricity supplied at below-market rates. But what has been the real impact of subsidies, and do they justify the huge financial burden they place on national budgets? This is a critical question in the Middle East and North Africa (MENA), as the region represents a disproportionate share of the world’s energy subsidies.
It is easy to see that data is crucial to the agency’s operations. Sitting down with EDL’s employees and managers—all wearing the agency’s signature blue-shirt uniform with pride—it also becomes apparent that the science of numbers and the art of managing people have gone hand in hand at this agency. This combination has enabled EDL to make organizational learning a central pillar of the agency’s success.
Institutions Taking Root, a recent report of which I’m a co-author, looked at nine successful institutions in fragile and conflict-affected states that share a core set of internal operational strategies.
- Urban Development
- Social Development
- Private Sector Development
- Labor and Social Protection
- Global Economy
- Climate Change
- Agriculture and Rural Development
- East Asia and Pacific
- South Asia
- Sri Lanka
Half the world’s energy subsidies are in the Middle East and North Africa Region. These subsidies have been criticized on grounds that they crowd out public spending on valuable items such as health, education and capital investment. Egypt for instance spends seven times more on fuel subsidies than on health. Furthermore, the allocation of these subsidies is heavily skewed towards the rich, who consume more fuel and energy than the poor. In Yemen, the portion of fuel subsidies going to the richest quintile was 40 percent; the comparable figure in Jordan was 45 percent and in Egypt, 60 percent.
What would you do if you won a billion dollars? Would you just buy more hamburgers for lunch or pick up some extra pairs of socks? Probably not. You would think bigger: maybe a boat, a mansion, a fancy car – luxury goods. Or you might try to make your life easier with a housekeeper, a driver, a chef – luxury services. This switch in the shopping list is so common that economists have a nerdy name for it: “non-homothetic” preferences. That is, people buy different things when they get more money.
It turns out that this dynamic is relevant for development, as we (Bill Battaile, Richard Chisik, and Harun Onder) found in “Services, Inequality, and the Dutch Disease,” a World Bank Policy Research Working Paper published this year. In particular, countries that see a rapid influx of income following a natural resource discovery – say oil or diamonds – are vulnerable to this pattern in a way that could hinder their overall chances of economic growth.
I’m on my way to the 7th South Asia Economic Summit (SAES) in New Delhi, India. The summit* brings together leading analysts, academics, policymakers, the private sector and civil society from across the region and beyond, who meet to suggest solutions to South Asia’s economic issues and learn from each other’s experiences.
This year’s SAES takes place at a very opportune time. Regional cooperation momentum has been on an upswing. The theme of the summit, “Towards South Asian Economic Union” captures the renewed optimism of moving forward on the regional agenda and generating shared prosperity. Apart from that, the SAES is held between November 7 – 8, only two weeks before the 18th SAARC (South Asian Association for Regional Cooperation) Summit, where heads of state from Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri-Lanka will meet in Kathmandu, Nepal.
The recent acceleration in growth rates across much of sub-Saharan Africa may not be purely commodity-driven, but for many of the region’s economies macro-economic stability is still dependent on prudent management of natural resources. For this reason, a strategic shift is required to shield African economies from commodity boom-burst cycles.
For much of the last half century, the dominant political economy model of natural resource management in Africa was this: states received royalties from mostly private mining companies and then were supposed to invest in public goods such as roads, hospitals, and schools. Private mining companies, for their part, would pick up the slack whenever states failed. Most of the time this happened through corporate social responsibility (CSR) initiatives, as a way of buying the social license needed to operate in specific communities.
This model has proven to be a complete failure in nearly all resource-rich African states, for a number of reasons.
We are living in very exciting times when it comes to renewable energy. All over the world, countries are taking steps to generate more and more of their power from their wind, solar and hydropower resources, among other means of clean energy production. This expansion is not just vital for human and economic development, it’s key to the world’s efforts to tackle climate change. With less than six weeks to go until policy makers gather for the next UN Climate Conference of the Parties in Lima, Peru and as part of a series of events at the World Bank’s annual meetings, we hosted a panel of energy experts to look at what it will take to rise to the renewable energy challenge and address energy poverty.
At a moment when good economic news is in short supply, this week’s observance of World Energy Day provides a chance to celebrate some positive news – positive, at least, from the viewpoint of the world's developed economies, which have lately been struggling to recover from prolonged stagnation.
The recent plunge in global energy prices was a major factor informing a World Energy Day forum on “The Green Side of Energy Security” – convened in Washington on Wednesday by the European Union Delegation to the United States. The plummeting cost of energy, thanks in part to vast increases in oil and natural-gas supplies, is now poised to give advanced economies a much-needed additional stimulus. That's helping dispel some of the gloom that pervaded the economic forecasts at the recent Annual Meetings of the World Bank Group and International Monetary Fund.
Moreover, the current global glut of oil and natural gas also highlights the success of a far-sighted innovation program that has helped strengthen productivity in the energy sector. The success of the 40-year-long U.S. program to create more effective methods of oil and natural-gas production has has transformed the global energy landscape. If those new production methods can be responsibly carried out, in compliance with strict environmental safeguards – and, granted, that’s a big “if” – then the economy will buy some extra time as it seeks to make the transition away from fossil fuels and toward cleaner, greener, more sustainable sources of energy.
The initiative's technological breakthrough epitomizes the creativity that public-private cooperation can unleash when governments and industries, working together, patiently invest to strengthen productivity in specifically targeted industries and sectors.
The worldwide price of crude oil has fallen about 25 percent – from more than $110 a barrel in midsummer to about $80 a barrel this week – thanks to a combination of reduced demand (due to sluggish economic activity in many industrialized countries) and vastly increased oil and natural-gas production. Despite the geopolitical tensions now afflicting several major oil-producing regions, large new supplies of oil and natural gas are projected to continue arriving on the market, maintaining downward pressure on energy prices.
Much of the increased supply has its origin in North America – where “the revolution in American shale gas and ‘tight oil’ is real,” according to energy-policy scholar and historian Daniel Yergin. Writing in the Financial Times this week, Yergin noted that “U.S. crude-oil output is up almost 80 percent since 2008, supplying an extra 3.9 million barrels a day. . . . Canadian oil sands have added another 1 million barrels a day to North American supply over the same period.”
The energy revolution is poised to deliver a powerful, positive economic impact: As industries and consumers pay less for oil and natural gas, they’ll receive the equivalent of a tax cut – with Yergin estimating its benefit at about $160 billion a year, just for the U.S. economy. Such a stimulus, if it helps buoy economic activity in Europe as well, will boost economies that have been mired in what threatens to become long-term “secular stagnation.”
For motorists who are now paying less at the gasoline pump – and for home-heating-oil and natural-gas consumers who are awaiting their first chilly-season heating bills – the oil-price plunge and natural-gas glut may seem like an economic deus ex machina.
Step by step, consider how this process delivered today's energy abundance.
- What inspired the arrival of these new energy supplies? New technologies and techniques – “hydraulic fracturing” and “horizontal drilling” – have helped coax once-inaccessible oil and natural-gas deposits out of underground rock formations.
- And how were those techniques developed? Through well-targeted innovation programs that were initially funded by government agencies.
- After government-funded R&D had proven the new technologies' promise, the new industrial methods were eagerly applied by innovators in the energy industry.
- Connect the dots: This revolution was brought to you by far-sighted, government-inspired investment initiatives that helped a strategically-chosen sector of the economy promote competitive industries and innovation.
- OK: Let's come right out and say it: This marks a triumph of industrial policy.
There: We actually said the fateful phrase: "industrial policy."
That always-somewhat-ambiguous term, "industrial policy," may have fallen out of political favor nowadays -- but there's no real reason to shrink from the idea, even though it's currently fashionable to use a euphemism like "innovation initiative" or "competitiveness strategy."
It's true, as skeptics suggest, that it's difficult to get industrial policy right. Public-private investment programs can be complex to design and sustain: In this case, it took about 40 years of experimentation and evolution to achieve the energy program's goals. Yet, when this initiative was launched in the energy-starved 1970s, various approaches to industrial policy were being vigorously pursued by many economies, large and small. (Yes, even the United States -- and even under conservative governments, as illustrated by the Ford Administration's pursuit of this program.) Put in its historical context, this example of 1970s-style industrial policy succeeded in delivering, at last, its long-promised payoff in productivity.
Piloted during the Ford Administration and ramped-up during the Carter Administration, this effort hailed from an era when repeated oil shocks were raising fears that the industrialized world would be threatened by oil-rich countries’ production cuts and price increases. Pragmatic R&D efforts on alternative oil-production methods were methodically pursued by the U.S. Department of Energy (DOE) and the U.S. Bureau of Mines, drawing on crucial technological insights from the taxpayer-supported network of national research laboratories.
Once that initial government-funded research had laid the foundation for new technologies and techniques, the private sector stepped in and played its indispensable part. A public-private partnership through the Gas Research Institute helped perfect the new techniques, while pro-innovation tax policies granted favorable federal tax treatment for investors’ R&D commitment to the energy sector. A champion of the new technologies, George P. Mitchell, evangelized for hydraulic fracturing and horizontal drilling, even when skeptics scoffed. Researchers at the Breakthrough Institute assert: “Where Mitchell proved invaluable was [in] engaging the work of government researchers and piecing together different federally-developed technologies to develop a commercial product.”
Mitchell’s determined experimentation with the new technologies built atop the crucial government investment in R&D. His entrepreneurial zeal was even more remarkable considering the opposition of many free-market absolutists on Capitol Hill, who disdained any type of public-private partnership that tolerated an active government role. Mitchell’s team gives credit where credit is due: “DOE started it, and other people took the ball and ran with it,” according to Mitchell’s former vice president and lead geologist. “You cannot diminish DOE’s involvement.”
Indeed, the impact of lower oil and natural-gas prices has been so dramatic that some energy-policy scholars, as became clear at this week’s European Union event, understandably worry that lower energy prices may lull governments and consumers into a false sense of security. Lower energy costs may remove a price-conscious spur to continued investment in cleaner, more sustainable alternative energy sources. That concern surely poses a genuine challenge for policymakers as they craft clean-energy and anti-climate-change strategies for the long term. Avoiding any backsliding on clean-energy investment will require sustained pro-innovation initiatives, and perhaps tax-policy adjustments, that promote long-term investment in cleaner energy sources. Disincentives on the use of fossil fuels is surely crucial to climate-smart strategies, speeding the transition toward renewable sources. The recent shale-gas revolution has bought some extra time for the economy to make that transition, and, as environmental advocates insist, that time must be used wisely.
Looking back on the process that delivered today’s shale-gas and tight-oil abundance, the lesson is clear: A well-targeted industrial policy – or, if you’d prefer to use the modernized lingo, competitiveness strategy – inspired today’s revolution in energy policy. It’s the latest proof that competitiveness strategies, with the public sector and the private sector both playing constructive roles, can contribute to positive change.
So the next time a dogmatic defender of laissez-faire passivity tries to tell you that government should always keep its hands completely off the economy – or scoffs that all forms of competitiveness strategy are merely doomed attempts at “picking winners and losers” – remind that laissez-faire fatalist about the positive economic impact of government-and-industry partnerships.
Yes, it took decades of patient public-private teamwork to trigger this energy revolution. And, yes, as environmentalists wisely warn, the new technologies must be used under strict regulation that upholds the highest degree of environmental protection. Yet, accepting all the caveats, the economy now seems ready to reap a rich reward.
Whether you embrace the term "industrial policy" or use a euphemism like "competitiveness strategy," this example of mission-focused, government-organized, private-sector-driven, technology-led progress provides dollars-and-cents evidence that activist strategies, promoting research and investment in high-priority sectors of the economy, can deliver a dramatic payoff in productivity.