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September 2013

Friday round up: Fighting extremism, Peru and health care, latest climate report, the Palma inequality measure, and Laos in space

LTD Editors's picture

Malaysia's Prime Minister is interviewed in New York earlier this week by Fareed Zakaria, explaining the Global Movement of Moderates that he set up to counter extremist ideology.

In "The BRICs Paradox: A Healthy Economy and Bad health Care," Eduardo Gomez writes in The Atlantic on how Peru is growing robustly yet still faltering in terms of health system reforms.

In the NYT's Dot Earth blog, Andrew Revkin describes how the IPCC's fifth report clarifies humanity's choices.

Is “Half Empty” Good News for Women’s Rights?

Mary Hallward-Driemeier's picture

Over the past 50 years, there has been tremendous progress in improving women's legal rights. Indeed, half of the gaps in women's legal rights to property and equal legal capacity were closed during the period 1960 to 2010 in 100 developed and developing countries, according to two new studies highlighted in the Women, Business and the Law 2014 report, launched on September 24. The challenge now is that some sticky areas persist where laws haven't changed or have even regressed. Tackling these remaining gaps is crucial given that strengthening women's legal rights goes hand in hand with better economic opportunities, health, and education — on top of being an inherent right — points made forcefully in the op.ed. by Sri Mulyani Idrawati, Managing Director of the World Bank.
 

Getting to Zero in the fight against extreme poverty

Lisa Horner's picture

We could be the generation that puts an end to extreme poverty. This is a bold claim that often prompts raised eyebrows and murmurs of disbelief. But it is an idea that Save the Children, The World Bank, and others have been reiterating as we engage with the international process to define a new  framework to replace the Millennium Development Goals (MDGs) – a set of concrete human development targets that have united global efforts to fight poverty since 2002, and are set to expire in 2015. 

But while ending extreme poverty is, of course, a laudable vision, is it a feasible proposition?  Could we really be the generation that achieves it, finishing the job that the MDGs started?

Why Didn’t the World Bank Make Reducing Inequality One of Its Goals?

Jaime Saavedra-Chanduvi's picture

The World Bank Group (WBG) has established that its mission, endorsed by the governors of its client countries, is centered around the goals of sustainably ending extreme poverty and promoting shared prosperity.  Extreme poverty is monitored by the percent of people living below the $1.25-a-day threshold.  The Bank’s mission thus gives a clear message:  Extreme poverty, hunger, destitution must come to an end.

To monitor progress in shared prosperity, the WBG will track the income growth of the bottom 40 percent of the population in each country.  The clear signal the WBG wants to give is that the institutional mission is about reducing poverty, fostering growth and increasing equity, so we need to monitor what happens to welfare of the less well off in every country.  Improving averages is not enough; a laser focus on those who are at the bottom of the distribution at all times, everywhere, is needed.

South-South Trade through Value-Added Glasses

Otaviano Canuto's picture

Using gross figures of exports and imports to approach the contribution of trade to economic growth and a country’s resource allocation may be misleading. Products often cross borders more than once while being processed until their final use and may thus be counted multiple times. Furthermore, given the increased use of imported intermediate goods and services associated with rising global trade flows in the last decades, not only exports of goods and services carry some content of imported inputs classified in other sectors, but also some exports of intermediate products may return embedded in imported final products. Therefore, in order to gauge appropriately where and how much is the value added by a country’s employed labor and other factors of production, one has to do due accounting of those intra- and cross-sector trade in order to measure trade in value-added terms – see a thorough analysis in Mattoo et al (2013).

Tales from the Development Frontier

Hinh T. Dinh's picture

How have China and other countries resolved the binding constraints in light manufacturing to create jobs and prosperity? This vital question is answered in a new book based on unprecedented access and detailed interviews at hundreds of Chinese firms in more than 15 cities (including the coastal regions that have fuelled the export boom), as well as visits to a dozen countries in Africa and Asia. The book, Tales from the Development Frontier: How China and Other Countries Harness Light Manufacturing to Create Jobs and Prosperity, focuses on labor-intensive manufacturing (apparel, leather goods, agribusiness, woodworking, and metal products). It is part of the Light Manufacturing in Africa Project being undertaken by a World Bank team in the Development Economics Vice Presidency. We draw from  analytical reviews, case studies, and the testimony of individual entrepreneurs to show how developing countries can grow manufacturing to create jobs and foster prosperity.

Avoiding the “Planning Paradox”: The New World Bank Strategy Must Take Risk and Uncertainty into Account

Norman Loayza's picture

The following post is a part of a series that discusses 'managing risk for development,' the theme of the World Bank’s upcoming World Development Report 2014.

As the ancient Greek philosopher Heraclitus wrote, the only thing constant is change. And with change comes uncertainty. Faced with choices for bettering their lives, people make virtually every decision in the presence of uncertainty. Young people decide what to study without knowing exactly what jobs and wages will be available when they enter the labor market. Adults decide how much to save for retirement in the face of uncertain future income and health conditions. Farmers decide what to cultivate not knowing with certainty whether there will be enough rain for their crops and what demand and prices their products will command in the market. And governments decide the level of policy interest rates and fiscal deficits in the presence of uncertain external conditions and domestic productivity growth.

Testing information constraints on India's largest antipoverty program

LTD Editors's picture

Public knowledge about India's ambitious Employment Guarantee Scheme is low in one of India's poorest states, Bihar, where participation is also unusually low. Is the solution simply to tell people their rights? Or does their lack of knowledge reflect deeper problems of poor people's agency and an unresponsive supply side?

The challenge of metropolitan governance in the face of rapid urbanization

Alexandra Linden's picture

From a demographic point of view, more than 9 billion people are expected to live on planet earth in 2050, two-thirds of them in cities. Actually, the entire anticipated population increase is to take place in urban areas, with over 90 percent in Africa, Asia, and Latin American and the Caribbean ; so, global urbanization has long since shifted to developing countries and emerging economies. Approximately 2.7 billion people live in urban agglomerations in developing and emerging economies today; in 2030, that number will rise to 3.9 billion – and reach 5.1 billion in 2050. Around 95 percent of this urban momentum is going to take place in metropolitan regions. Established mega regions like Sao Paulo or Mumbai, as well as urban agglomerations composed of rapidly growing small and medium-sized cities will become the key living and economic spaces of the urban millennium.

Worth the wait in Zanzibar

Raka Banerjee's picture

My experiences with field work thus far have been nothing if not adventurous. I seem to attract broken glass – a rock the size of a small coconut crashing through my 3rd floor window in Zanzibar, for instance, or the windows of my taxi being broken with baseball bats by an armed mob in Mali. Just the other day, my boss and I came within inches of dying in a fiery plane crash – we were on our way back to the main island of Zanzibar from Pemba island in a tiny 12-seater Soviet-era plane, and were just about to land in a strong crosswind when the engine on my side failed.  We managed to land, somehow, and taxied to a stop right there on the runway to wait for a vehicle (ironically, it ended up being an ambulance) to take us to the terminal.

Weekly round up: Fresh water, India's economy, the Global Fund and the next wireless revolution

LTD Editors's picture

How clean water is reaching India's slums via solar-powered ATMs.

And newly discovered aquifers as a potential source of fresh water in Kenya.

Ashutosh Varsney in the Indian Express on Democracy v. Capitalism in India and Raghuram Rajan on making, 'The Case for India.'

What do a Pacific Island fisher and a Wall Street banker have in common?

Nilar Chit Tun's picture

A: Both of them will be affected by the ongoing effects of climate change.
 
In less than 40 years from now the cost to the world's biggest coastal cities from flooding is expected to have risen to $1tn – 0.7% of the value of the entire world economy in 2012. Average global flood losses could rise from around $6 billion per year in 2005 to $60 to $63 billion per year by 2050, thanks to population and economic growth along the coasts and the multiplying effect of climate change-driven sea level rise. Coastal communities in the US were firmly reminded of what could happen with rising waters during Superstorm Sandy. The effects of global warming and climate change were no longer academic discussion points, but reality in the form of flooded subways in the heart of Manhattan.

Myopia and (dis-)incentives - The political economy of managing risk

Jun Erik Rentschler's picture

The following post is a part of a series that discusses 'managing risk for development,' the theme of the World Bank’s upcoming World Development Report 2014.

It is an old and well known criticism of electoral politics: the conflict between short political mandates and long term objectives. To galvanize political support, policy makers not rarely resort to “benevolent” political measures, such as short-sighted tax reductions or infrastructure investments, which are often more beneficial to their own election polls than to their electorate. Such political myopia is alarmingly common, and stands in the way of effective policy making in the long term interest of people.
Risk management is one of the fields in which effective action tends to be impaired by political myopia. For instance, implementing comprehensive regulation in the financial sector, or imposing stringent environmental requirements on certain industries, would help managing the risks of financial or environmental crises. Similarly, the installation of early warning systems for tsunamis or hurricanes could provide decisive information for preparation and timely evacuation. 

Samoa Diary

Kaushik Basu's picture

A discomfiting feature of going to places off the beaten track is the surprise shown by the natives themselves. I recall traveling to Dushanbe from Moscow by Somon Airways; the flight attendant--a young Tajik woman--on learning that I am an Indian living in Washington, looked puzzled and asked, enunciating each word, "Why, may I ask you, are you going to Tajikistan?" The slight sense of alarm caused by the query hinting at faulty decision making on my part was heightened by Aristomene Varoudakis, a gifted economist and one of my advisers at the World Bank, pronouncing, ten minutes into the flight: "So far, so good." Those words, meant to be comforting, were disquieting in their suggestion that this was a journey in which ten minutes without a mishap deserved a toast.

The same was true as I headed to Samoa. The flight was full of Samoans who could have walked out of a Paul Gauguin frieze, a few surfers and some missionaries. Jimmy Olazo and I from the World Bank did not fit into any of these categories and faced the inevitable interrogation on why we were going there. Samoa is indeed an unusual country to visit. It is impossibly small, with a population of less than 200,000. Its resources are meager, consisting of fish, some agricultural products and spectacular scenery. To an economist the viability of an economy like this is a conundrum. Where do you get the economies of scale from to produce your cars, hospitals, clothes? How much fish and tourism can you supply to the rest of the world to pay for these? Is it possible to help Samoans organize a steady flow of workers, skilled and unskilled, to other nations and rely on their remittances? How do you provide any insurance against the risks of natural disaster and calamity, a concern that, as I discovered over the next three days, dominated the lives of the Samoans? How do you conduct monetary policy in such an impossibly small nation?

Who creates jobs?

Ejaz Ghani's picture

The role of entrepreneurs in job creation has a long intellectual tradition (Cantillion 1730, Knight 1921, Schumpeter 1942). While the great economic minds throughout history recognized the link between entrepreneurship, regional development, and job creation, controversies remain. Our understanding of entrepreneurship is still at an early stage (Glaeser et al 2009, Klapper and Love 2011). How does one quantify entrepreneurship? Do young/small establishments or large/established firms contribute to job growth? Have manufacturing or service sectors created more jobs? What is the geographical scale at which entrepreneurial mechanics function? Why do some cities attract more entrepreneurs? Do agglomeration economies and networking differ across formal and informal sectors and industries, cities, and gender? What makes some local governments fiscally more entrepreneurial than others? These questions provide insights into job creation and they have rightly attracted the attention of researchers, but many of them remain unanswered.

Finance as an Economic Cholesterol

Otaviano Canuto's picture

A country’s income depends on its accumulated wealth and how efficiently and innovatively this wealth is employed to produce goods and services. Does what a country produce matters? Are there constraints or drivers of wealth accumulation that can be associated with specific economic activities within a country?

The question is as old as development economics. Is specialization in producing (mineral or agricultural) commodities inherently more limiting than producing manufactures? More recently, the question has been extended to a contraposition between manufactures and services.