Women's group. Kenya. Photo: © Curt Carnemark / World Bank
It has been nearly two decades since the Fourth Women’s Conference in Beijing in 1995. The conference was a milestone in the advancement of women’s empowerment, because it highlighted the pertinent issues women face. We have come a long way since 1995. From the implementation of gender equity policies in the workplace to coordinated action on violence against women and human trafficking, we have seen commendable progress.
Supporting populations in fragile and conflict-affected situations (FCS) is a key priority for the World Bank Group. The Group’s President, Jim Yong Kim, has repeatedly stressed the importance of finding ways to bring sustainable peace and development to these difficult contexts. According to the World Development Report 2011: Conflict, Security, and Development, more than 1.5 billion people in today’s world live in FCS, or in countries with high levels of criminal violence.
Apart from the very human cost of fragility, it colors foreign investors’ perceptions of risk, especially political risk, affecting private sector activity. This begets a vicious cycle, where economies worsen, increasing fragility. The importance of political risk, including political violence, in the perceptions of investors is well documented, including in the annual MIGA-EIU surveys presented in MIGA’s World Investment and Political Risk report. In particular, MIGA’s 2011 report focused specifically on investing into FCS, and the survey results demonstrate that political violence remains a very serious factor inhibiting investment.
Aside from capital, foreign direct investment (FDI) can bring essential knowledge and technology across borders. These benefits are often what make FDI so sought-after by policy makers. But investors have to consider the return on their investment relative to the risks they are taking, especially political risks such as expropriation, currency convertibility and transfer restrictions, breach of contract by the sovereign, and war and civil disturbance.
A major World Bank Group report this week found that growth is stagnating in developing countries. It’s projected to be below 5 percent for the third straight year. That’s too modest to create the kind of jobs we need to improve the lives of the poorest people around the world.
If this trend continues, it will have long-term negative implications on developing countries, including the loss of an historic opportunity to end extreme poverty in the next generation. Millions of people around the world have been able to escape poverty over the last few decades largely because of high economic growth in developing countries.
As the job market in the Middle East and North Africa (MENA) region becomes increasingly global and competitive, young people with varying degrees of training and education find themselves struggling to find work. With half its population of 355 million under the age of 25, MENA has the second youngest regional population in the world after sub-Saharan Africa. If this social, economic, and academic malaise continues, a high proportion of the MENA region’s youth will be unable to leave home, get married, and develop independent lives.
Buy a leather case for your wife’s smartphone on Amazon, select shipping from China with an estimated delivery time of 4-6 weeks, and then be pleasantly surprised when it turns up on your Virginia doorstep in 11 days. The marvels of the modern age – of technology, globalization, and shrinking distances.
Where does South Asia stand on export delivery? Figure 1 illustrates that compared to other economic units around the globe, it is a lot more difficult to trade with(in) SAFTA (South Asia Free Trade Agreement). It also shows that bureaucratic hurdles and the time it takes to trade go hand-in-hand. While the region does relatively well on trade with Europe or East Asia, intra-South Asian trade has remained low and costly. It costs South Asian countries more to trade with their immediate neighbors, compared to their costs to trade with distant Brazil (see below)! In fact, it is cheaper for South Asian countries to export to anywhere else in the world than to export to each other (Figure 3). In other words, South Asia has converted its proximity into a handicap.
The economics book that has launched a thousand blog posts, Thomas Piketty’s Capital in the Twenty-First Country, tells a grand story of inequality past and present. One would expect that a book on global inequality would have much to say about development. However, the book has limited relevance for the developing world, and the empirical data he marshals for developing countries is weak.
Piketty’s central story is that convergence in the developed world and slower population growth will leave us with a permanently modest economic growth rate (g). Coupled with a constant return to wealth (r), concentration of capital ownership, and high rates of savings among the wealthy, the low g leads to rising wealth inequality over a longish run—something like the second half of the 20th century.
A low-g future for the developed world is a mostly uncontroversial assumption. (He assumes future GDP per capita growth of 1.2 percent for the U.S.) But Piketty draws conclusions for the world as a whole, and we are a long way from global convergence. As Branko Milanovic noted in his review, catch-up growth could fend off Piketty’s inequality dystopia for some time.