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Macroeconomics and Economic Growth

“Seven” is the world’s defining number: what does it mean for Kenya?

Wolfgang Fengler's picture

As a fan of numerology, let me focus on a special number that captures a global trend: call it the lucky number seven. Since the end of last year, we are seven billion people in the world. We produce a total GDP of US$70 trillion (which means that globally per-capita income is US$10,000 on average) and the average life expectancy worldwide is--you guessed it--70 years.

Let’s extend the seven thread: if the world economy grew at seven percent per year, it would double within a decade (because ten years of seven percent growth don’t amount to 70, but 99 percent, due to the compounding effect). Now with population growth at one percent (thankfully not seven), average per capita incomes would increase from US$10,000 to about 18,000. That is quite a jump, and a level of prosperity that few of our parents and grand-parents would never have imagined.

Sadly though, averages will continue to mask wide disparities, both between countries and within societies.

Prospects Daily: European stocks slipped on Friday with the benchmark index falling to a three-week low

Global Macroeconomics Team's picture

Financial Markets…European stocks slipped on Friday with the benchmark index falling to a three-week low as early optimism on Spain’s new austerity measures was short-lived.

Spanish 10-year bond yield rose back above 6% amid uncertainty over its troubled banks before stress test results, fading optimism on the country’s debt cutting plan, and a looming Moody’s rating review which may cost the country its investment grade rating. 

Prospects Weekly: Latest bout of G3 monetary stimulus is likely to increase capital flows to developing countries

Global Macroeconomics Team's picture

The latest bout of G3 monetary stimulus is likely to increase capital flows to developing countries, but may be limited by lingering economic uncertainty, and lower interest rate spreads. Notwithstanding the recent easing of financial market tensions, the anticipated rebound in real-side activity is lagging behind.

Like a Hummingbird – From Chile to Mongolia

Otaviano Canuto's picture

MiningIncreased cross-learning and cooperation among developing countries has been a remarkable feature of the global economy in recent decades.  It's been some time now since knowledge and technology flowed only from advanced economies ("North") to developing ones ("South").

Country policy and institutional assessment: How well are African countries doing?

Punam Chuhan-Pole's picture

Every year, the World Bank’s country teams and sector experts assess the quality of IDA countries’ policy and institutional framework across 16 dimensions to measure their strenght and track progess.  

The latest country policy and institutional assessment (CPIA) results show that despite difficult global economic conditions, the quality of policies and institutions in a majority of Sub-Saharan African countries remained stable or improved in 2011.

DOWNLOAD the indicators here: www.worldbank.org/Africa/CPIA

For several countries the policy environment is the best in recent years. Of the 38 African countries with CPIA scores, 13 saw an improvement in the 2011 overall score by at least 0.1. Twenty countries saw no change, and five witnessed a decline of 0.1 or more. The overall CPIA score for the region was unchanged at 3.2.  

In short, despite a challenging global economic environment, African countries continued to pursue policies aligned with growth and poverty reduction. 

What will it take to end poverty in Africa?

Shanta Devarajan's picture

My colleague Jim Kim has launched a social media campaign on what it will take to end global poverty (please send your solutions via twitter to #ittakes.) I was reminded of a blog post I did about four years ago entitled “Ending poverty in Africa and elsewhere”. 

My answer then and now is:  Overcome government failure.  By “government failure,” I don’t mean that governments are evil or even that they are incompetent or ill-intentioned.  Analogous to “market failure,” government failure refers to a situation where the particular incentives in government lead to a situation that is worse than what was intended with the intervention.  

For instance, governments finance and provide primary education so that poor children can have access to learning.  But if teachers are paid regardless of whether they show up for work, and politicians rely on teachers to run their political campaigns, the result is absentee teachers and poor children who don’t know how to read or write—precisely the opposite of what was intended.  We see similar government failures in health care, water supply, sanitation, electricity, transport, labor markets and trade policy.

Not All That Glitters Is Gold

Otaviano Canuto's picture

imageGross Domestic Product, better known as GDP, is the market value of all final goods and services produced within a country in a given period. That's why GDP per capita is widely used as a summary indicator of living standards in a country. No wonder we keep our eyes closely on its evolution and compare its levels among countries.
 

Sweetening Kenya’s future – The challenges of the sugar industry

Wolfgang Fengler's picture

Do you ever wonder, looking at the food in your plate, where it has come from and who produced it?

Surely you have thought about what explains its price on the shelf! Kenyans love sugar, which they use liberally in their tea: on average each Kenyan consumes 400 grams of sugar per week, much more than their Tanzanian neighbors who consume approximately 230 grams. In Africa, only the residents of Swaziland and South Africa have a sweeter tooth.

Globally, 70 percent of the sugar that is produced is consumed in the same country and only 30 percent is exported. In principle this is good for customers in sugar-producing countries, as long as the supply is sufficient to keep prices low. In Kenya, this is not the case: there are occasional sugar shortages and, when they can be anticipated, prices rise to extraordinary levels. 


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