Investment growth in emerging market and developing economies has tumbled from 10 percent in 2010 to 3.4 percent in 2015 and was below its long-term average in nearly 70 percent of emerging an developing economies in 2015. This slowing trend is expected to persist, and is occurring despite large unmet investment needs, including substantial gaps in infrastructure, education, and health systems.
We chose to highlight this book for the World Development Report (WDR) 2017 Seminar Series as its focus on institutional functions rather than forms and on adaptation resonates strongly with the upcoming WDR 2017.
The first takeaway of the book, that a poor country can harness the institutions they have and get development going is a liberating message. Nations don’t have to be stuck in the “poor economies and weak institutions” trap. This provocative message challenges our prevailing practice of assessing a country’s institutions by their distance from the global best practice and ranking them on international league tables. Yuen Yuen’s work, in contrast, highlights the possibility of using existing institutions to generate inclusive growth and further impetus for institutional evolution.
What’s the latest research in international trade and integration? Researchers from the World Bank, the IMF and the WTO recently gathered for a one-day workshop to present their latest research on the topic. The papers presented addressed topical questions in areas as diverse as the links between trade, wage inequality and the poor, global value chains, non-tariff measures, preferential trade agreements, FDI restrictions, and migration. We provide a quick roundup on the papers presented during the workshop.
Figure 1: Poverty and inequality in rural China
Last month, the World Bank and IMF both put out predictions that, this year, India would overtake China in terms of GDP growth rate. This caused a flutter and was widely reported around the world. How robust is this prediction and what does it really mean?
First, this is not as monumental a milestone as some commentators made it out to be. China has had one of the most remarkable growth runs witnessed in human history, having exceeded an annual growth of 9% from 1980 to now. Four decades ago its per capita income was close to India’s, but now it is four times as large as India’s. None of all this is going to change in a hurry.
With this caveat in mind, it is a year in which India deserves to feel good. It is expected to top the World Bank’s chart of growth rates in major nations of the world. This has never happened before. Before 1990, India did occasionally grow faster than China, mainly because China’s growth gyrated wildly during the pre-Deng Xiaoping period. It was, for instance, minus 27% in 1961, when Mao Zedong’s Great Leap Forward resulted in the world’s biggest famine, and it was 17% and 19% in 1969 and 1970, respectively--a relief in the wake of the Cultural Revolution. Fluctuations of this magnitude would be intolerable to India’s polity.