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January 2011

New Brookings Study is Overly Optimistic on Progress Against Poverty

Martin Ravallion's picture

A new paper by Laurence Chandy and Geoffrey Gertz at the Brookings Institution reports a remarkable acceleration in the pace of progress against absolute poverty since 2005, as can be seen in Figure 1 of their paper (found here). This would be great news if it could be believed, but there are reasons for doubt. 

In “updating” the World Bank’s estimates using the Bank’s PovcalNet site, Chandy and Gertz have relied heavily on forecasts rather than estimates based on new surveys. Household surveys are the only credible method of measuring poverty. The technology has improved, but naturally the data take time to collect and process. We still do not have sufficiently recent surveys for many countries, especially in Sub-Saharan Africa, the region with the highest overall poverty rate. The next edition of the World Bank’s regular three-yearly updates of its survey-based estimates of global poverty measures is scheduled for release later this year, and will go up to 2008, and revise consistently back to 1980.  (Information on the last update can be found here. The paper documenting the methods and testing their robustness can be found here.)   

Growth identification and facilitation – let the debate begin

Célestin Monga's picture
 photo: istockphoto.com

In the famous movie Forrest Gump (1994), which is the story of an innocent man who represents how the world should be, the main character Tom Hanks remembers: “My Mama always said, ‘Life is like a box of chocolates; you never know what you’re gonna get.’” Development economists working on industrial policy should always keep in mind that motherly wisdom and maintain humility in their random quest for the recipe for economic growth.

In a recent paper on ‘Growth Identification and facilitation: The role of the state in the dynamics of structural change,’ Justin Yifu Lin and I have tried to suggest a rational way of looking at the trial-and-error process that successful economic development always involves. In a new post on his excellent blog ‘Africa Can,’ my colleague Shanta Devarajan welcomes our work but asserts that we gloss over the politics that underlie efforts by governments to guide certain industries toward success.

Whither the development agency’s flagship report?

Adam Wagstaff's picture

The Economist carried a couple of stories recently about how two hitherto major institutions in my home country (newspapers and pubs) have been forced to adapt in the face of changes in public preferences. Many didn’t—as a result newspaper circulation and pub numbers have both fallen dramatically. The newspapers and pubs that did survive operate very different business models from the newspapers and pubs in existence even 10 years ago.

Some data I’ve assembled make me wonder whether—like the newspaper and pub—the development-agency flagship might not also be an institution in need of reform.

The flagship

Most big development and international agencies have a flagship. The World Bank launched its World Development Report in 1978. The IMF’s World Economic Outlook started two years later. The UNDP launched its Human Development Report in 1990, and WHO followed with its World Health Report five years later. Several other UN agencies have annual or periodic flagship reports too.

China, the US and clean energy cooperation

Justin Yifu Lin's picture
 Photo: istockphoto.com

Presidents Hu and Obama created buzz earlier this week in Washington when they met on pressing bilateral issues, including US-China business and investment regulation, trade, currency imbalances and security concerns. US-China clean energy cooperation is an important part of that bilateral dialogue (see transcript of my intervention at a January 18 US-China Strategic Forum hosted by Brookings).

Why?
Cooperation between the two countries can yield big economic benefits.  The world is recovering from the worst economic crisis since the Great Depression. In this context, taking advantage of clean energy opportunities is crucial to fueling a sustained global recovery. 

Of Dark Matter and Domesday

Kirk Hamilton's picture

As surprising as it may seem, there is a deep dark secret at the core of the System of National Accounts (SNA) – the accounts used by Finance ministries worldwide to measure economic performance. The numbers don’t add up. We can see this in the table below, showing the net worth of Brazil and its composition in 2005. The final two lines in the table report a measure of Brazil’s net national income and the implicit rate of return on wealth (the ratio of income to net worth). The return to Brazil’s produced and natural capital is over 18%! As good economists, we should all be investing our pension funds in Brazil. Why? Because financial market data tell us that the long run real rate of return across the broad range of assets averages only about 5% a year.
 

Table – Net worth and net national
Income (NNI) in Brazil, 2005, $million
Produced capital  1,909,259
Natural capital 1,713,939
Net financial assets -117,221
   
Net worth 3,505,978
   
Adjusted NNI 636,356
Implicit rate of return 18.2%
Source: The Changing Wealth of Nations
World Bank (2011)

 

The (gradual) democratization of development economics

Adam Wagstaff's picture

We’ve read a good deal recently about the democratization of research. UNESCO’s Science Report 2010 showed a growth in the developing-country share of science research. As UNESCO Director General Irina Bokovo put it in her Foreword:

 Photo: istockphoto.com

“The distribution of research and development (R&D) efforts between North and South has changed with the emergence of new players in the global economy. A bipolar world in which science and technology (S&T) were dominated by the Triad made up of the European Union, Japan and the USA is gradually giving way to a multi-polar world, with an increasing number of public and private research hubs spreading across North and South.”

The global economy ushers in new phase of recovery, but vigilance is required

Justin Yifu Lin's picture
Photo: © World Bank

Two years after the crisis triggered by the collapse of Lehman Brothers, the world economy has entered a new phase of recovery. Most developing countries have recovered to pre-crisis (or close to pre-crisis) levels of activity and have transitioned from a bounce-back phase to more mature growth.

We estimate in our new online Global Economic Prospects 2011 report that the growth rate for the world economy was 3.9% in 2010 and is likely to be to 3.3% this year, then 3.6 % in 2012.

The GDP growth rate for developing countries was a robust 7 percent in 2010, up sharply from 2% growth in 2009. This year we project the developing world will record GDP growth of 6%, then edge to an estimated 6.1% in 2012. This far outstrips the high income countries, which grew by 2.8% in 2010 and are estimated to growth by 2.4% this year and 2.7% next year.

Schooling in Haiti: Persistent Challenges and Glimmers of Success at the 1-year Anniversary

Peter Holland's picture

 A school girl in Haiti.  Photo © World Bank
The one-year anniversary of Haiti’s catastrophic earthquake gives us pause to reflect on the progress of the reconstruction efforts, despite the tremendous challenges the country has faced.   The human tragedies (one million still homeless, about 150,000 infected with cholera) compounded by the ongoing political standoff can be despairing.  Still, there are some glimmers of success that provide some motivation for those of us working to transform and modernize Haiti.  The findings from our recent working paper provide a bit more confidence that we are heading in the right policy direction in Haiti’s education sector.  Given the country’s data-scarce environment, this kind of objective reassurance is hard to come by, and very welcome. 

Improving public health with open data

Tamar Manuelyan Atinc's picture

Major funders of public health research – the World Bank included – have today issued a joint statement to champion the wider sharing of data to achieve better public health worldwide.

Mother and boy being attended to by Health Education nurse. Sri Lanka. Photo © Dominic Sansoni / World Bank

This is a great step forward: advances in public health throughout the decades, perhaps like no other discipline, have been underpinned by careful research based on data. An early and celebrated example is the epidemiologist John Snow’s study of the relationship between the water supply and cholera outbreaks in central London in 1854, which used public data to establish the link between contaminated water and the disease. More recently, the mapping of the human genome was completed by a global collaborative effort based on the sharing of effort and data.

In many fields and in many countries, sharing of data is fast becoming normal practice (www.data.gov). An environment where data are open, freely available and easily accessible to all can provide tremendous benefits for development. At the World Bank we opened our databases last April. And there are great examples of agencies starting to routinely provide access to their datasets, which were previously closely guarded, such as data collected through household surveys.

A New Year’s Resolution: Closing the Gap on Trade Research

John Wilson's picture
 Photo: istockphoto.com

New Year’s resolutions are always of the lofty – but often short-lived kind.  I will go to the gym more often, lose more weight, or volunteer more often than I do now.  One resolution made by a number of  us in the Research Group of the Bank – and elsewhere, has been to find a way to get more people excited about investing in data collection and analysis on trade.  I recognize this is not the most glamorous of topics at any time of the year – but nonetheless a resolution as important as any made each year for decades as the calendar turns another page.

Here is why 2011 is different and resolutions made can be kept, however, and why data and research should be high on anyone’s development and trade agenda.
There were a number of high level dialogues in 2010 and 2011 related to global finance, trade, and development issues.  These included the High Level Summit on the MDG’s in September 2010 and the G20 Summit in Seoul in November 2010.  These events provided important opportunities -- in the post-crisis environment – to inform priorities going forward on aid effectiveness and trade.  The President of the Bank, Mr. Zoellick, outlined in October 2010 -- in a very high profile speech at Georgetown University – a new vision of development economics which included new ways of looking at and advancing research tied to make aid more effective and inclusive.