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Global Economy

Chart: Economic Development and the Composition of Wealth

Tariq Khokhar's picture

The composition of wealth fundamentally changes with economic development. Natural capital—energy, minerals, land and forests—is the largest component of wealth in low-income countries. Its value goes up, but its share of total wealth decreases as economies develop. By contrast, the share of human capital, estimated as the present value of future incomes for the labor force, increases as economies develop. Overall, human capital accounts for two-thirds of the wealth of nations. Read more in The Changing Wealth of Nations

 

Chart: Global Wealth Grew 66% Between 1995 and 2014

Tariq Khokhar's picture

Global wealth grew by 66% between 1995 and 2014 to a total of over 1,140 Trillion dollars. The share of the world’s wealth held by middle-income countries is growing — it increased from 19% to 28% between 1995 and 2014, while the share of high-income OECD countries fell from 75% to 65%. Read more in The Changing Wealth of Nations

 

What keeps the President of the World Bank up at night?

Jim Yong Kim's picture
Residents of Kashadaha village visit the Kashadaha Anando school in Kashadaha village, Bangladesh. © Dominic Chavez/World Bank
Residents of Kashadaha village visit the Kashadaha Anando school in Kashadaha village, Bangladesh. © Dominic Chavez/World Bank


This year’s World Economic Forum Annual Meeting comes at a time of good news for the world economy. As we said in this month’s Global Economic Prospects report, for the first time since the financial crisis, the World Bank is forecasting that the global economy will be operating at or near full capacity. We anticipate growth in advanced economies to moderate slightly, but growth in emerging markets and developing countries should strengthen to 4.5% this year.

Can Islamic finance unlock funds for development? It already is

Amadou Thierno Diallo's picture

Also available in  العربية | Français



Two years in the making, last week the Islamic Development Bank Group (IsDBG) and the World Bank Group officially launched the landmark report Mobilizing Islamic Finance for Infrastructure Public-Private Partnerships at a discussion broadcast online from Washington, D.C. We illustrated that, through partnerships, the power of Islamic finance can be instrumental in unlocking financial resources necessary to meet the tremendous demand for critical infrastructure.
 
In fact, infrastructure PPPs funded with Islamic finance have proliferated in the Middle East, and have flourished in other countries throughout Africa and Asia. Both of our institutions are committed to leverage our competitive advantages, achieve effective interventions, and yield measurable results in scaling up and broadening the use of Islamic finance.

Transitions and Time Lags: Understanding a Dispiriting but Temporary Phenomenon

Antonius Verheijen's picture


Having spent much of my working life working with and in countries in transition, it remains painful to watch the disillusionment that so often strikes people that had the courage to change a bad political situation, but then are forced to live through economic hardship. It is those that chose change that seem always to suffer most. But one source of hope is that, fortunately, this hasn’t stopped people from trying. This was true for Southern Europe in the late 1970s (though I was still in school at the time), Central and East European countries in the 1990s, several African countries in the 2000s and, as history has a knack for repeating itself, Tunisia today. 

Africa’s partnership with the G-20: Compact with Africa in 2018

Jan Walliser's picture
Expansion of the Azito Thermal Power Plant, in Côte d'Ivoire, will improve access to electricity for Ivoirians and help sustain the country's economic growth. © Cedric Favero/IFC
Expansion of the Azito Thermal Power Plant, in Côte d'Ivoire, will improve access to electricity for Ivoirians and help sustain the country's economic growth. © Cedric Favero/IFC


Editor's Note: Below is a viewpoint from Chapter 6 of the Foresight Africa 2018 report, which explores six overarching themes that provide opportunities for Africa to overcome its obstacles and spur inclusive growth. Read the full chapter on the changing nature of Africa's external relationships here.

Germany’s presidency of the G-20 in 2017 introduced a new initiative for supporting African countries’ development: the G-20 Compact with Africa. The compact brings together interested African countries with the World Bank Group, the International Monetary Fund, the African Development Bank, and other multilateral and bilateral partners to develop and support policies and actions that are essential for attracting private investment. To date, 10 countries have signed up for the initiative and outlined their aspirations and reform programs under a framework adopted by the G-20 finance ministers in March 2017. 

Why the global economy could be turning a significant corner, in six charts

Ayhan Kose's picture

2018 will likely mark a turning point for the global economy. For the first time since 2008, the negative global output gap – defined as the difference between the levels of actual output and output if operating at full capacity – is expected to close. As the output gap closes in advanced economies, central banks are likely to normalize monetary policy after a decade of exceptional easing. With this anticipated withdrawal of stimulus by advanced economies, emerging market and developing economy policymakers need to remain alert to the potential for adverse spillovers.

Output gaps are closing

In 2018, for the first time since 2008, the negative global output gap is expected to be closed.

Global output gap
Source: World Bank staff estimates.
Notes: Output gaps calculated using multivariate filter. Global, regional, and group output gaps are calculated using constant 2010 U.S. dollar GDP as weights. The sample includes 15 advanced economies (Australia, Canada, Denmark, Finland, France, Germany, Italy, Japan, New Zealand, Norway, Spain, Sweden, Switzerland, United Kingdom, and United States) and 23 EMDEs (Argentina, Bolivia, Brazil, Bulgaria, Chile, China, Colombia, Croatia, Hungary, India, Indonesia, Kazakhstan, Malaysia, Mexico, Peru, Poland, Romania, Russia, Serbia, South Africa, Thailand, Turkey, and Vietnam). 2018 GDP is forecast. Dashed lines are 95 percent confidence interval bounds computed from the Kalman smoother state variances. Global lower and upper bounds are obtained as GDP-weighted averages of individual country lower and upper bounds.

What triggered the oil price plunge of 2014-2016 and why it failed to deliver an economic impetus in eight charts

Marc Stocker's picture
Also available in: Español

Download the January 2018 Global Economic Prospects report.

The 2014-16 collapse in oil prices was driven by a growing supply glut, but failed to deliver the boost to global growth that many had expected. In the event, the benefits of substantially lower oil prices were muted by the low responsiveness of economic activity in key oil-importing emerging markets, the effects on U.S. activity of a sharp contraction in energy investment and an abrupt slowdown in key oil exporters. 

Biggest drop in oil prices in modern history

Between mid-2014 and early 2016, the global economy faced one of the largest oil price declines in modern history. The 70 percent price drop during that period was one of the three biggest declines since World War II, and the longest lasting since the supply-driven collapse of 1986.

Real oil prices
Source: World Bank.
Notes: Real oil prices are calculated as the nominal price deflated by the international manufacturers unit value index, in which 100=2010. World Bank crude oil average. Last observation is November 2017.

Transforming Transportation 2018: To Craft a Digital Future for All, We Need Transport for All

Jose Luis Irigoyen's picture



Exponential progress in how we collect, process and use data is fundamentally changing our societies and economies. But the new digital economy depends fundamentally on a very physical enabler. Amazon and Alibaba would not exist without efficient ways to deliver products worldwide, be it by road or ship or drone. The job you applied for through Skype may require travel to London or Dubai, where you’ll expect to get around easily.

In fact, as the backbone of globalization, digitization is increasing the need to move people and goods around the planet. Mounting pressure on transportation as economies grow is leading to unsustainable environmental and safety trends. Transport needs are increasingly being met at the cost of future generations.

Can the digital revolution, which depends so much on efficient global and local mobility, also help us rethink transportation itself? To be a part of the solution to issues such as climate change, poverty, health, public safety, and the empowerment of women, the answer must be yes. Transport must go beyond being an enabler of the digital economy to itself harnessing the power of technology.

#4 from 2017: Review of Doughnut Economics – a new book you will need to know about

Duncan Green's picture

https://flic.kr/p/9XqtbSOur Top Ten blog posts by readership in 2017. This post was originally posted on April 24, 2017.

My Exfam colleague Kate Raworth’s book Doughnut Economics is launched today, and I think it’s going to be big. Not sure just how big, or whether I agree with George Monbiot’s superbly OTT plug comparing it to Keynes’s General Theory. It’s really hard to tell, as a non-economist, just how paradigm-changing it will be, but I loved it, and I want everyone to read it.

Down to business – what does it say? The subtitle, ‘Seven Ways to Think Like a 21st Century Economist’, sets out the intention: the book identifies 7 major flaws in traditional economic thinking, and a chapter on each on how to fix them. The starting point is drawings – working with Kate was fun, because whereas I think almost entirely in words, she has a highly visual imagination – she was always messing around with mind maps and doodles. And she’s onto something, because it’s the diagrams that act as visual frames, shaping the way we understand the world and absorb/reject new ideas and fresh evidence. Think of the way every economist you know starts drawing supply and demand curves at the slightest encouragement.Her main target is GDP (the standard measure of national economic output), and its assumptions – an open systems approach to economics that ignores planetary boundaries as it promotes economic growth. Her breakthrough moment while at Oxfam was coming up with ‘the doughnut’ – two concentric rings representing the planetary ceiling and minimum standards for all human beings. The ‘safe and just space’ between the two rings is where our species needs to be if it wants to make poverty history without destroying the planet.

When Kate came up with the doughnut in a highly influential 2012 paper for Oxfam, my non-visual mind failed to grasp its full value. After all, wasn’t this just a restatement of the idea of sustainable development? But it went viral, especially at the UN, because it allowed activists and policy makers to visualize both the threats and how they were trying to overcome them.


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