April 2011

Aid, MDGs, and Gender

'Development aid’ is always surrounded by questions. Some argue whether it shows results, and some worry about the way it is spent. And the imminent question is, where does it go? Well, it does have some impact. According to the latest UNESCO report ‘Financing Education in Sub-Saharan Africa’, development aid accounts for 50% of the government education budget in some countries of Africa. “Over the last decade public spending on education in Africa has increased by more than 6% each year”, says the report. However, much remains to be done to distribute it well between primary and higher education, as often requirements of the primary education system suffer. Thus, cutting aid is definitely not a smart move as explained by Liz Allcock and Jimmy Kainja in their post ‘Cutting UK aid to Malawi will hurt the poor, not the leaders’.

In the past 30 years, China has achieved phenomenal economic growth, an unprecedented development “miracle” in human history. Since the institution of its reforms and Open Door policy in 1978, China’s gross domestic product (GDP) has been growing at an average annual rate of more than 9 percent (figure 1). In 2010, it has surpassed that of Japan and become the world’s second-largest economy.

With just four years to the target date of 2015, progress on the health-related Millennium Development Goals (MDGs) has been slow. Measuring progress has been hampered by the lack of quality and timely data; this is especially true when measuring progress toward goals that rely on civil registration for their information, such as Goal 4 on reducing child mortality. Available data in the new edition of World Development Indicators show that of the 144 countries for which data are available, more than 100 countries remain off-track to reach the MDG 4 by 2015.

In his Inquiry into the Nature And Causes of the Wealth of Nations Adam Smith pointed to the social-inclusion role of a linen shirt in 18th century Europe:

“A linen shirt … is, strictly speaking, not a necessary of life. The Greeks and Romans lived, I suppose, very comfortably though they had no linen. But in the present times, through the greater part of Europe, a creditable day-labourer would be ashamed to appear in public without a linen shirt, the want of which would be supposed to denote that disgraceful degree of poverty which, it is presumed, nobody can well fall into without extreme bad conduct.”

This passage has often been used to justify the view that poverty is not absolute but relative—that certain socially-specific expenditures are essential for social inclusion, on top of basic needs for nutrition and physical survival.

The way this idea is implemented in practice is to set a “relative poverty line” that is a constant proportion of average income for the country and date in question. That is how poverty is measured in most of Western Europe. By contrast, poverty measures in developing countries have almost invariably used absolute lines, which aim to have a fixed real value over time. The World Bank’s international “$1 a day” poverty lines also aim to be absolute lines across countries, using purchasing power parities from the International Comparison Program.

Structural transformation is a key determinant of productivity growth and explains two-thirds of the difference between superior East Asian growth and more muted Latin American growth in the past two decades.

Given the multi-speed paths that regions and countries take as they transform, with some succeeding spectacularly and some struggling to compete, it may be time to consider new industrial and labor policies to ensure that a huge swath of the lower middle class in the developing world doesn’t get left behind in the race to compete in today’s unforgiving global marketplace.

Amanda Glassman’s blog post on Ghana’s health insurance program and the firestorm it produced (hat tip to Mead Over) is a reminder of the passions that health reform debates still generate. This is intriguing because my sense is that while we health-reform aficionados are berating one another in the blogosphere, policymakers in Asia are quietly iterating toward something of a consensus on a whole swathe of key issues on health reform. The process isn’t always driven by hard evidence, but that’s because there isn’t much hard evidence either way. I certainly don’t see compelling evidence against the emerging consensus—if that’s what it is. And what’s emerging is rather interesting.

Which comes first in the wake of revolution, bread or freedom?

A Reuters reporter asked about this during the embargoed press briefing last Friday to launch the World Development Report 2011: Conflict, Security and Development. What she wondered about was the tough choices of what to deal with most urgently in the throes of revolutions like we are seeing in the Middle East and North Africa.

In other words, should policymakers pay urgent attention to, say, food, jobs and the flow of cash or do justice and political change take precedence?

Services can now be stored, traded digitally, and are not subject to many of the trade barriers that physical exports have to overcome. Services are no longer exclusively an input for trade in goods, but have instead become a “final export” for direct consumption. Importantly, services not only have become more tradable, but can also be increasingly unbundled: a single service task or an activity in the global supply chain can now be fragmented and done separately at different geographical locations. This has led to a new channel of growth, what we call sophistication in service exports.

Global warming may have severe consequences for developing countries prone to extreme weather events. Projections by the Intergovernmental Panel on Climate Change and the World Meteorological Organization suggest the frequencies and/or intensities of climate extremes will increase in the 21st century. Some recent extreme weather events illustrate how severe their consequences can be. Examples include heavy floods in Australia and Brazil in 2011, extreme winter weather all over Europe, heat wave in Russia, devastating floods in Pakistan, India, China, and Mozambique in 2010, and super cyclones in Myanmar (in 2008) and Bangladesh (in 2007).

China has been the fastest growing country in the world over the past two decades and as it gains economic clout, it is worthwhile to envision where the country is going and how it has gotten to where it is today.

In 1990, while China was home to 20 percent of the world’s population, it commanded a mere 1.6 percent of global GDP. Now it is the world’s second largest economy and produces 8.6 percent of global GDP (in 2009). Even after that extraordinary leap forward, the country still has the advantage of backwardness and it has the potential to have another 20 years of rapid transformation.

It’s 1988. I’ve just started my career as a statistician in the British Civil Service. One of my first tasks: find data to compare the major aid donors of the world: how much they give, and the size of their economies.

Today, it seems an almost trivial task. There are plenty of good on-line resources and tools, like the OECD’s aid statistics website, the new AidFlows tool, and the Bank’s own data website.

But twenty three years ago there isn’t a computer on every desk. There is no internet, no World Wide Web. So no email, no instant messages, no Google. Communication is by letter (in quintuplicate, I should add), fax, phone – and more than an occasional telex. And getting hold of some data means spending a few happy hours in the statistical annex of the departmental library, digging out the latest statistical publications.

April 2011

Aid, MDGs, and Gender

China’s Special Economic Zones and Industrial Clusters: Success and Challenges

Why Civil Registration matters in the countdown to the Millennium Development Goals

What Does Adam Smith’s Linen Shirt Have to do with Global Poverty?

Structural Change, growth and jobs

Health reform: A consensus emerging in Asia?

Bread, freedom and the WDR 2011 on Conflict, Security and Development

Can service exports drive growth?

A High Cost to Bangladesh if it Remains Unprepared for Climate Change

China’s enduring potential

World Bank Atlas and me: 1988 and now

April 2011

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