These are some of the views and reports relevant to our readers that caught our attention this week.
#Davosproblems: The financial crisis isn‘t over, and the inequality crisis is just beginning
The World Economic Forum’s annual meeting has kicked off in Davos, Switzerland under the banner of “The New Global Context.” Falling in the long shadow of the financial crisis, the WEF’s theme reflects as much hope as a creeping sense that economic turmoil is the new normal. Some seven years into the current crisis, the participants at Davos are acutely aware that the world economy still hasn’t recovered its past momentum.
The Power of Market Creation, How Innovation Can Spur Development
Most explanations of economic growth focus on conditions or incentives at the global or national level. They correlate prosperity with factors such as geography, demography, natural resources, political development, national culture, or official policy choices. Other explanations operate at the industry level, trying to explain why some sectors prosper more than others. At the end of the day, however, it is not societies, governments, or industries that create jobs but companies and their leaders. It is entrepreneurs and businesses that choose to spend or not, invest or not, hire or not.
These are some of the views and reports relevant to our readers that caught our attention this week.
This is Davos week, and over on the Oxfam Research team’s excellent new Mind the Gap blog, Deborah Hardoon has an update on the mind-boggling maths of global inequality.
Wealth data from Credit Suisse, finds that the 99% have been getting less and less of the economic pie over the past few years as the 1% get more. By next year, if the 2010-2014 trend for the growing concentration of global wealth is to continue, the richest 1% of people in the world will have more wealth than the rest of the world put together.
Measurements of wealth capture financial assets (including money in the bank) as well as non financial assets such as property. It is not just inefficient to concentrate more and more wealth in the hands of a few, but also unjust. Just think of all the empty properties bought by wealthy people as investments rather than providing housing for those in need of a home. Think of the billionaire chugging out carbon emissions flying around in a private jet, whilst the poorest countries suffer most from the impacts of climate change and the poorest individuals living want for a decent bicycle to get to school or work.
A revolution starts with an idea, but to become real, it has to move quickly to a practical proposition about getting stuff done. And getting things done needs money. If the ideas generated last year, in the report of the UN Secretary General’s Independent Expert Advisory Group and elsewhere, about how to improve data production and use are to become real, then they will need investments. It’s time to start thinking about where the money to fund the data revolution might come from, and how it might be spent.
Getting funding for investment in data won’t be easy. As hard-pressed statistical offices around the world know to their cost, it’s tough to persuade governments to put money into counting things instead of, say, teaching children or paying pensions. But unless the current excitement about data turn into concrete commitments, it will all fade away once the next big thing comes along, leaving little in the way of lasting change.
Last August, the UN Secretary-General Ban Ki-moon asked an Independent Expert Advisory Group (IEAG) to make concrete recommendations on bringing about a Data Revolution in sustainable development. In response, the IEAG delivered its report, and among other items, recommends, “a new funding stream to support the Data Revolution for sustainable development should be endorsed at the Third International Conference on Financing for Development,” in Addis Ababa in July 2015.Three Issues Papers for Consultation
To support this request and to stimulate conversation, the World Bank Group has drafted issues papers that focus on three priority areas:
The papers aim to flesh out the specific development needs, as well as financing characteristics needed to support each area. A fuller understanding of these characteristics will determine what kind of financing mechanism(s) or instrument(s) could be developed to support the Data Revolution.
After the New Year arrives, most of us have the habit of making New Year resolutions. Whether it is a higher salary, a promotion, world travel or even weight loss, some wishes are similar among us and our friends. This year, after meeting the students attending the 11th South Asia Economic Students Summit (SAESM), I realized how New Year wishes can be vastly different from one corner of the world to another.
Here’s a sample of New Year “wish lists” of the South Asian students who attended the 11th SAESM in Thimphu, Bhutan held between Dec. 23-28, 2014.
“I hope South Asia can have a similar program to ERASMUS in Europe, where students are allowed to spend one year or a semester working or interning in a different South Asian country."
- Phalguni, Kirorimal College, India
From my house in northern Quezon City, I drive more than two hours every day to get to the office in Bonifacio Global City, which is about three cities away where I come from, and two cities away from the capital Manila. It’s a journey that should only take around half an hour under light traffic. That is a total of four hours on the road a day, if there is no road accident or bad weather. It takes me an hour longer whenever I use the public transport system. Along with hundreds of thousands of Metro Rail Transit (MRT) commuters, I have to contend with extremely long lines, slow trains, and frequent delays due to malfunctions. This has been my experience for several years. Many of us might be wondering: why have these problems persisted?
“Intelligence and capability are not enough; there must also be the joy of doing something beautiful.” These words by Dr. Venkataswamy tower over us as we enter the flagship Aravind Eye Hospital in Madurai, India, and continue to reflect in the staff’s philosophy during our short visit.
The Aravind Eye Hospital needs no introduction. Tucked in the remote south of India, it is the result of its founder’s vision of eliminating needless blindness. Started in 1976 by Dr. Venkataswamy, the hospital provides accessible, affordable and quality eye care to all sections of the society through cross-subsidization, which creates a commercially viable and sustainable business model.
Aravind Eye Care is an example of a business model innovation, also referred to as an ‘inclusive business model’. IFC defines inclusive business models as those offering goods, services and livelihoods to the poor in financially sustainable and scalable ways. Globally, inclusive businesses are being recognized as important players for development. More entrepreneurs are realizing the bottom of the pyramid (BoP) market as an opportunity to design and implement innovative solutions. As per an IFC study, the BoP represents a potential market of $5 trillion globally - the largest slice of this lies in South Asia, particularly India, given the size of BoP population in the region.
However, inclusive businesses continue to face several barriers in scaling and replicating their success such as lack of access to finance, absence of trained human resources, weak supply chain linkages etc. and above all, an underdeveloped support ecosystem to overcome critical market gaps. Addressing these barriers will not only help capitalize on the growth potential but also mainstream the sector.
World Bank Group is playing a catalytic role in unlocking opportunities for innovative, impact focused businesses. The South Asia Inclusive Business Program has been working towards enhancing private sector participation and inclusive business activity in the region. While working on the high level through systemic interventions, the team is also connecting with organizations on the ground by supporting them to scale sustainably and/or replicate across borders.
“We need everybody,” as World Bank Group President Jim Yong Kim has passionately argued. “We need writers who can write about this. We need engineers. We need doctors. We need lawyers. We need artists. We need everybody who can capture the imagination of the world to end poverty." There’s a role in development for public-spirited people from every profession who seek to contribute to the cause.
Deep legal knowledge and deft legal reasoning are certainly part of the skill set needed to eradicate poverty and promote development. That’s because “you can’t have justice without advocates for justice,” as the Justice Community of Practice at the World Bank Group recently learned from the leader of an energetic initiative to link public-spirited legal practitioners with the nonprofit and non-governmental organizations (NGOs) that need their skills.
The legal acumen that helps for-profit law firms succeed in the marketplace is often sought by nonprofits, human-services groups and human-rights advocates. Lawyers' skills can often make a crucial difference for organizations that deal with social prorities – whether it’s by tackling complex challenges like protecting refugees or defending prisoners of conscience, or by pursuing routine tasks like negotiating an office-space lease or reviewing an employment contract.
Matching the needs of social organizations with the capacity of lawyers who have a bit of time to commit to pro bono publico ideals – and thus to “strengthen the global pro bono community” for the long term – is the goal of PILnet, the Global Network for Public Interest Law. PILnet president Edwin Rekosh recently told the Bank’s justice-focused group that “promoting voluntarism among lawyers” often starts with the simple question, “Do you care about doing something good with your free time?” If so, “What do you care about?”
Lawyers within some of the world’s largest international law firms, in particular, often find that they have some spare capacity when they're in-between client assignments. Putting those flexible hours to good use for a pro bono client can both satisfy the lawyers’ altruistic aspirations and reflect well on their firms’ commitment to devote time and talent free of charge to worthy social causes.