During the dry season, N. S. Reddy, a farmer in Kadapa district of Andhra Pradesh, cultivates groundnut on two acres using water from his own borewell, which he runs for the six hours every day that his village gets electricity. His neighbor, J. R. Prasad, owning a borewell of similar capacity, fully cultivates his single acre of land, but also sells water to A. R. Murthy to grow sunflower. At the end of the season, Mr. Murthy gives Mr. Prasad 3000 Rupees as payment on his contract for irrigating this half acre. In a different village, a similar scenario plays out, but here the borewell owner, K. Chandra, sells M. S. Krishna five irrigations, one-at-a-time throughout the season, at 1000 Rupees apiece.
Agriculture and Rural Development
Advances in earth observation, computing power, and connectivity have tremendous potential to help governments, and us at the World Bank, support better land management, and ultimately reduce poverty and promote shared prosperity.
There are three ways in which these technologies profoundly change the scope of our work.
Factor Allocation and Growth
A central challenge for developing countries is to promote growth by reducing the misallocation of factors of production—labor, capital and land. While there may not be such a thing as a perfectly efficient factor allocation, evidence shows that there are huge gains in growth from reducing factor misallocation. Growth requires more efficient firms to produce more output and use more factors of production. Our past work has shown that land allocation is barely better than random at best, and probably worse than random in India. Put differently, low productivity firms have better access to land and buildings than high productivity firms. Indeed, land and buildings misallocation appears to be at the root of much of the misallocation of output and it accounts for a large share of the observed differences in output per worker in the manufacturing sector.
Also available in: Français
Recently, Canada’s newly elected Prime Minister, Justin Trudeau, appointed a cabinet that is 50% female. Explaining the choice, Trudeau stated that it was important “to present to Canada a cabinet that looks like Canada” – and “because it’s 2015.”
The announcement has been greeted with considerable backlash in the press, with some news outlets going as far as to imply that promoting diversity is not good for governance. This view implies an either or – that appointing women and incorporating gender balance, while good for the country’s diversity, would undermine the quality of governance. One could probably name many male candidates who on paper look more accomplished than some of Trudeau’s appointees.
Our quarterly Commodities Markets Outlook report analyzes markets for major commodities groups and forecasts prices for 46 commodities from bananas to zinc. The price declines are part of a five-year-long commodities slump.
We just published our Commodity Market Outlook for the third quarter of 2015, and report that most prices declined in the second quarter of 2015 due to ample supplies and weak demand, especially in industrial commodities (see figure below).
Energy prices rose 12 percent in the quarter, with the surge in oil offset by declines in natural gas (down 13 percent) and coal prices (down 4 percent). However, energy prices fell on average to 39 percent below 2014 levels. Natural gas prices are projected to decline across all three main markets—U.S., Europe, and Asia—and coal prices to fall 17 percent. Excluding energy, our report notes a 2 percent decline in prices for the quarter, and forecasts that non-energy prices will average 12 percent below 2014 levels this year. Iran’s new nuclear agreement with the US and other leading governments, if ratified, will ease sanctions, including restrictions on oil exports from the Islamic Republic of Iran. Downside risks to the forecast include higher-than-expected non-OPEC production (supported by falling production costs) and continuing gains in OPEC output. Possible (less likely) upside pressures may come from closure of high-cost operations—the number of operational oil rigs in the US is down 60 percent since its November high, for example—and geopolitical tensions.