The themes and areas for action emphasized by the World Bank find a good reflection in the outcome of the recently concluded G-20 summit in Seoul, Korea. The main theme of the report submitted by the Bank - that in a progressively multipolar world economy, the goals of global growth, rebalancing, and development are increasingly interconnected - had good resonance in the summit discussion. The point was made by several leaders, some echoing verbatim the report's message that rebalancing "should not be a zero-sum game, rotating demand from one to another", that the "objective is to lift growth, not just shift growth", and that "developing countries can be an important source of new demand for stronger and more balanced global growth" (words from para 2 of the report's executive summary). For example, UK's prime minister David Cameron said exactly that. India's prime minister Manmohan Singh made the same point, echoed also by presidents Hu Jintao (China), Lula (Brazil), and Zuma (South Africa).
Muchos observadores predicen que la cumbre del Grupo de los Veinte (G-20) que se lleva a cabo esta semana en Seúl será recordada principalmente como un baile de alta diplomacia destinado a persuadir a sus miembros para que se abstengan de una devaluación competitiva de sus monedas y regulen los desequilibrios excesivos en cuenta corriente.
Si la mayoría de los titulares de Seúl se refieren a disputas sobre divisas y a quién pertenece el déficit o superávit más perjudicial, entonces los líderes se habrán malgastado la oportunidad de llegar al fondo de la cuestión.
En efecto, ese resultado sería un revés para los países en desarrollo y afectaría posiblemente la legitimidad del G-20 como agente de inclusión de la cooperación económica y financiera en la economía mundial.
There is a shared sense that globalization has a strong potential to contribute to growth and poverty alleviation. There are several examples of countries in which integration into the world economy was followed by strong growth and a reduction of poverty, but evidence also indicates that trade opening does not automatically engender growth. The question therefore arises, why the effects of globalization have been so different among countries of the world.
A look at changes in the structure of employment in Latin America and in Asia hints at possible explanations for observed differences in the growth effects of trade. Since the 1980s, Asia and Latin America have both rapidly integrated into the world economy. Asia has enjoyed rapid employment and productivity growth, but the consequences for Latin America have been less stellar.
The chart below shows how the pattern of structural change has differed in the two continents. The chart decomposes labor productivity growth in the two regions into three components: (i) a “within” component that is the weighted average of labor productivity growth in each sector of the economy; (ii) a “between” component that captures economy-wide gains (or losses) from the reallocation of labor between sectors with differing levels of labor productivity; and (iii) a “cross” component that measures the gains (or losses) from the reallocation of labor to sectors with above-average (below-average) productivity growth. The underlying data for the charts come from the Groningen Growth and Development Centre.
L. Garrett, A. Chowdhury, A. Pablos-Méndez. “All for universal health coverage”, The Lancet, 2009, 374(9697), pp. 1294-1299
Maps, like pictures, are often worth a thousand words. The map above comes from an article in the medical journal The Lancet. The article is part of a campaign to make 2010 the year of a big push toward universal health coverage. Over the course of the next three days, over a thousand health systems researchers are gathering in Switzerland for the First Global Symposium on Health Systems Research; the theme of the symposium is “science to accelerate universal health coverage”. Next week, health ministers from around the world will gather at an international ministerial conference on “Health Systems Financing – Key to Universal Coverage” hosted by the German government. At the conference, the World Health Organization will launch its 2010 World Health Report entitled “Health Systems Financing: The Path to Universal Coverage”.
(Also available in Spanish)
Many observers predict that this week’s G-20 Summit in Seoul will be remembered mainly as a dance of high diplomacy aimed at persuading members to refrain from competitive devaluation of currencies and to reign in excessive current account imbalances.
If most headlines from Seoul are about spats over currencies and whose deficit or surplus is most harmful, then leaders will have missed the Seoul of the Matter.
Indeed, such an outcome would be a setback for developing countries and could potentially erode the legitimacy of the G-20 as an inclusive broker of financial and economic cooperation in the global economy.
Children haveing a meal at school. Ghana. Photo: © Arne Hoel/The World Bank
“Food security exists when all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life.”
This profoundly important—and seemingly-simple—definition of food security from the World Food Summit of 1996 actually has four elements:
1. Enough food must be available to meet people’s needs.
2. People must have access to the food that is available under normal circumstances.
3. Volatility in production or prices must not threaten this availability, and
4. The quality of food that people consume must be adequate for their needs.
There is an increasing consensus about the need of poorer economies to shift away from low technology, low productivity areas into new product areas, particularly to generate non-commodity exports. The figure below shows the low level of manufactured exports from the poorest region, sub-Saharan Africa (SSF) as well as from Southeast Asia (SAS) compared to other regions. It is this disparity that many have in mind in urging a sectoral transformation. In the 1950s and early ‘60s there was an argument for a “big push” in development premised on export pessimism.
|*lcn- Latin America & Caribbean, mea- Middle East & Africa, SAS - Southest Asia, ssf- Sub-Saharan Africa, eap- East Asia & Pacific, and eca- Europe & Central Asia|
The emphasis on the big push and balanced growth continued until the 1970s when the success of export oriented countries in Asia such as Korea and Taiwan (China) demonstrated that it was possible to escape the need to have balanced internal growth. Annual export growth of 15 percent or more helped to effect a major transformation in many of the newly industrialized Asian nations. A critical question is whether five decades later this option is still open.
Ghana. Photo: © Arne Hoel/The World Bank
If you have ever had a conversation with a finance minister couched in terms of hectares of forestland or tons of greenhouse gases, then you appreciate one of the central problems of environment and development. It tends to be a short conversation, and for good reason – talking about the environment and natural resources this way simply doesn’t fit the model used by economists. If we want to reach ministers of finance and development planning we need not only to value the economic contribution of nature, but to express it in the framework of the System of National Accounts (which includes, among other measures, Gross Domestic Product or GDP as the predominant indicator of economic progress used by macroeconomists).
|Port of Rades, Tunisia. Photo: © Dana Smillie / World Bank|
As the G20 looks to establish itself as a permanent fixture in the multilateral policy dialogue, it should consider the global aid-for-trade agenda a top priority. The Summit in Seoul next month presents a unique opportunity to take concrete action in new directions on aid for trade.
The G20 originated – in part – as a global financial crisis management forum, and expanded out of the G8, in the wake of the 2008 world economic crisis. The Group has gained momentum and is solidifying its unique position as the most influential decision making group on global economic stability and growth. As it looks to solidify its transition as a global “steering committee” to sustain sound global growth what better policy issue to champion than one that is high profile, critical to both developed and developing countries, and in need of more effective global coordination -- than aid for trade?
Ahmed Galal is currently Managing Director of the Economic Research Forum, a regional research institution covering the Arab countries, Iran and Turkey.
As someone who values the role of knowledge and strong endogenous research capacity in advancing the cause of development, I was very impressed by the speech Robert Zoellick, World Bank President, gave on September 29 at Georgetown University. The speech, on development economics research and the role of the World Bank, stimulated an interesting debate, with Dani Rodrick being favorable, Bill Easterly critical and Nancy Birdsall somewhere in between.
From my perspective, the speech is refreshingly critical of the “one size fits all” approach to reform, honest about the evolution of thinking within the Bank, and open-minded about the new research agenda for development. It hits target by advocating research that is policy relevant. And it calls for “Democratization of Research” and a new role for the Bank as a knowledge broker and facilitator. All these are in line with the views of many researchers in the developing world, myself included.