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Financial Sector

The challenge of affordable housing for low-income city-dwellers

Zaigham M. Rizvi's picture



Housing is a numbers game: The more people there are in any city or town, the greater the need is for housing. The number of people living on the planet is rising every second, as the
World Population Clock shows, while the amount of habitable land (what housing specialists call “serviced land”) remains limited.

It is critical that additional affordable, decent dwellings be developed, as today’s world population of about 7.38 billion (increasing by more than 80 million per year, at the current population growth rate of about 1.13 percent per annum) approaches about 9 billion by 2030 and a projected 11 billion by 2050.

Urbanization intensifies the need for city-focused housing: By 2030, nearly two-thirds of the world’s population will be urban – and, even more daunting, nearly half of that urban population will be living in poverty, in substandard housing or in slums. The challenge of providing affordable housing for low-income city-dwellers is universal, with intensifying urban congestion making it an urgent priority in Asia and Africa.

Toward a more durable form of globalization, beyond 'neoliberal' negligence

Christopher Colford's picture

“Globalization and technological change create huge challenges for modern economies, but they are not uncontrollable forces of nature. The economy we have is the economy we choose to build. It is time to make different choices, and show that capitalism can be remade.” — Prof. Mariana Mazzucato of the University of Sussex and Prof. Michael Jacobs of University College London, the editors of “Rethinking Capitalism.”

The shadows lengthen and the daylight shortens amid these elegiac end-of-summer evenings — but there’s a palpable feeling nowadays, in Washington and other capitals, that we’re approaching not just the sunset of a season, but the twilight of an era.

The sudden change in the policy discourse over the past year has shattered the familiar old contours of the globalization debate, with a “populist explosion” in the world’s developed economies forcing policymakers everywhere to reconsider the boundaries of “the art of the possible.” In many of the world's developed economies, a recalibration of globalization is under way.

In this insolite interim, the fraught phrase of Antonio Gramsci comes to mind: “The crisis consists precisely in the fact that the old is dying and the new cannot [yet] be born. In this interregnum, a great variety of morbid symptoms appear.”

Three incisive recent analyses illustrate the impassioned arguments that underscore this end-of-an-era feeling. Together, the analyses set the stage for the imminent publication of a new book of essays by a group of eminent economists, whose ideas may chart the way toward a more durable, more inclusive approach to globalization.

 
  • Second: Diagnosing how a phase of economic history may have run its course, Nobel Prize-winner Joseph Stiglitz (a former Chief Economist of the World Bank) in Project Syndicate asserts that the laissez-faire approach to globalization has reached its (il)logical conclusion: “The failure of globalization to deliver on the promises of mainstream politicians has surely undermined trust and confidence in the ‘establishment.’ . . . Neoliberals have opposed welfare measures that would have protected the losers [of globalization]. But they can’t have it both ways: If globalization is to benefit most members of society, strong social-protection measures must be in place. The Scandinavians figured this out long ago; it was part of [their] social contract. . . . Neoliberals elsewhere have not – and now, in elections in the US and Europe, they are having their comeuppance.”  
 
  • Third: A series of insightful columns by Martin Sandbu in The Financial Times – tracing an “insurrection [that] has been a long time coming” – explores the links among economic stress and social-class anxiety that provoked this year’s social eruption: “Over the past generation, the trajectory of the white working class has no doubt changed the most for the worse, compared with the previous generation.”


The history-minded reflections of Jacques, Stiglitz and Sandbu underscore the fact that many economists are still pondering how so many of their policy prescriptions went so badly wrong, opening the way for the global financial crisis.

What will it take for India to reach double digit growth?

Prajakta S. Sapte's picture

 
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“Despite the global slowdown, India has been one of the few countries to have shown remarkable growth in the last financial year. While this has been an achievement in itself, this growth rate can be taken to double-digits.” This was the key message of Dr. Frederico Gil Sander, Sr. Country Economist, World Bank Group, New Delhi. Dr. Gil Sander was speaking to students at the IIM Ahmedabad as part of the World Bank - IIM Discussion Series. The discussion centered around “Financing Double-digit Growth: Current and Long-term Challenges of India’s Financial Sector”.

Dr. Gil Sander noted that urban consumption and public investment have been the key drivers for current growth. Additionally, a good monsoon this year is expected to give a boost to rural consumption. These, coupled with the promised emphasis on supply-side factors such as labour reforms, the inclusion of more women in the labour force, and the timely implementation of GST can boost economic growth. To further increase this growth rate, potentially to double-digits, these drivers will first have to be augmented by productive capacity investment, which in turn depends on ease of credit availability from banks. However, credit growth in India is marred primarily by high lending rates, priority sector lending regulations and rising non-performing assets (NPAs).

The effects of benchmarks on international capital flows: The problems of passive investing

Sergio Schmukler's picture

The categorisation of countries into relevant international benchmark indices affects the allocation of capital across borders. The reallocation of countries from one index to another affects not only capital flows into and out of that country, but also the countries it shares indices with. This column explains the channels through which international equity and bond market indices affect asset allocations, capital flows, and asset prices across countries. An understanding of these channels is important in preventing a widening share of capital flows being impacted by benchmark effects.

Prioritizing infrastructure investments: Helping decision-makers do their job

Cledan Mandri-Perrott's picture

Government officials and PPP practitioners make difficult decisions about infrastructure projects all the time. But perhaps the choice they grapple with the most is which projects to select for implementation within a given investment period. Many factors come into play, such as government budget constraints, the relative efficiency and effectiveness of investments, as well as costs and benefits of projects to society. With so much to consider, governments need improved decision-making frameworks that are rigorous enough to accommodate multiple components but practical enough to remain feasible and affordable.

Digital Financial Services for Cocoa Farmers in Côte d’Ivoire

Corinne Riquet's picture


Smallholder farmers, even those in structured value chains such as cocoa farmers in Côte d’Ivoire, are largely unable to access banks, microfinance institutions and other formal financial institutions. Providing meaningful financial services to these customers in an affordable and sustainable manner is a great challenge.

Investing in pre-crisis financial risk management eases post-disaster recovery needs

Gloria M. Grandolini's picture
Young girl in an evacuation center, 2009. Philippines. Photo: Jerome Ascano / World Bank

Since natural disasters can strike anywhere and anytime, making far-sighted preparations is much more effective than scrambling to respond to a crisis. I recognized this after Hurricane Mitch ravaged Honduras and my grandmother had to be evacuated because the local river swelled to the second floor of her home.
 
As climate change intensifies extreme weather events across much of the planet, countries are seeking the World Bank Group’s support to improve both their physical and financial resilience to disasters.
 
We are increasingly working with governments to devise sound financial planning and risk management before a disaster strikes, not just to assemble financing to help countries recover in its wake.

Market-based instruments – such as insurance -- can act as shock absorbers in case of natural disaster, helping countries avoid the worst of a crisis’ financial impact.

‘Smartest Places’ via smarter strategies: Sharpening competitiveness requires ingenuity, not inertia

Christopher Colford's picture

Seeking an antidote to the gloom-and-doom bombast of this election year? Try a dose of optimism about urban“hotspot hustle and cutting-edge cool” – with a book that champions smart public policy, delivered through a shrewd approach to Competitiveness Strategy.

Gazing into the rear-view mirror is a mighty reckless way to try to drive an economy forward. Yet backward-looking nostalgia for a supposedly safer economic past – with voters' anxiety being stoked by snide sloganeering about “taking back our sovereignty” and “making the country great again” – has infected the policy debate throughout this dispiriting election year, in many of the world’s advanced economies. Scapegoating globalization and inflaming fears of job losses and wage stagnation, populists have harangued all too many voters into a state of passivity, lamenting the loss of a long-ago era (if ever it actually existed) when inward-looking economies were, allegedly, insulated from global competition.


Optimism has been in short supply lately, but an energetic new book – co-authored by a prominent World Bank Group alumnus – offers a hopeful perspective on how imaginative economies can become pacesetters in the fast-forward Knowledge Economy. Advanced industries are thriving and productivity is strengthening, argue Antoine Van Agtmael and Fred Bakker, now that many once-declining manufacturing regions have reinvented their industries and reawakened their entrepreneurial energies.

Welcome to the brainbelt,” declares “The Smartest Places On Earth: Why Rustbelts Are the Emerging Hotspots of Global Innovation” (published by Public Affairs books). Now that brainpower has replaced muscle-power as the basis of prosperity in an ever-more-competitive global economy, the key factor for success is "the sharing of knowledge." Longlisted for the Financial Times/McKinsey Business Book of the Year Award, “Smartest Places” is receiving well-deserved attention among corporate leaders and financial strategists – and it ought to be required reading for every would-be policymaker.

The era of “making things smart” has replaced the era of “making things cheap” – meaning that industries no longer face a “race to the bottom” of competing on costs but a “race to the top” of competing on creativity. Knowledge-intensive industries, and the innovation ecosystems that generate them, create the “Smartest Places” that combine hotspot hustle and cutting-edge cool.





Those optimistic themes may sound unusual to election-year audiences in struggling regions, which are easy prey for demagogues manipulating populist fears. Yet those ideas are certainly familiar to readers at the World Bank Group, where teams working on innovation, entrepreneurship and competitiveness have long helped their clients shape innovation ecosystems through well-targeted policy interventions that strengthen growth and job creation.

“Smartest Places,” it strikes me, reads like an evidence-filled validation of the Bank Group’s recent research on “Competitive Cities for Jobs and Growth.” That report, published last year, offers policymakers (especially at the city and metropolitan levels) an array of practical and proven steps that can help jump-start job creation by spurring productivity growth.

Safer buildings are the key to a disaster resilient future

Ede Ijjasz-Vasquez's picture
A few months ago, a 7.8 magnitude earthquake in Ecuador claimed hundreds of lives, left almost 28,000 people injured, and caused $1 to 3 billion worth of damage. Most human and economic losses were directly linked to the collapse of buildings: the tremor caused the destruction of an estimated 10,000 structures, many of which were located in unsafe areas or did not meet minimum safety standards.
 
The tragedy in Ecuador serves as a stark reminder that, in many cases, it is not earthquakes or other disasters that kill people, but failing building structures. Therefore, improving building safety will be key in protecting communities against rising disaster and climate risk.
 
With over a billion dwelling units expected to be built between now and 2050, focusing on new construction will be particularly important, and will help mitigate the impact of natural disasters for generations to come.
 
The good news is that we have the knowledge and technology to build safe, resilient structures. But, more often than not, this knowledge is not put into practice due to insufficient or poorly-enforced regulation, as well as a lack of incentives.
 
In this video, Ede Ijjasz and Thomas Moullier explain why building safety will play a critical role in enhancing disaster resilience, and discuss concrete recommendations on how to get there.
 
If you want to learn more about this topic, we invite you to discover our latest Sustainable Communities podcast.
 
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Moving toward financial inclusion in East Asia and the Pacific

Leora Klapper's picture

Surging account ownership among the poor. The highest rate of account ownership among women in developing countries. Widespread formal saving.

Those are some of the key financial inclusion trends in East Asia and the Pacific, as outlined in a new policy note drawing on the 2014 Global Findex database.

Since 2011, about 700 million adults worldwide have signed up for an account at a formal financial institution (like a bank) or a mobile money account. That means 62 percent of adults now have an account, up from 51 percent three years ago.

East Asia and the Pacific made an outsized contribution to this global progress. About 240 million adults in the region left the ranks of the unbanked; 69 percent now have an account, an increase from 55 percent in 2011 (figure 1). Poor people led the regional advance, as account ownership among adults living in the poorest 40 percent of households surged by 22 percentage points — to 61 percent. Much of the growth was concentrated in China — which saw account penetration deepen on the bottom of the income ladder by 26 percentage points — but China was hardly alone. In both Indonesia and Vietnam, account ownership doubled among adults living in the poorest 40 percent of households.


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