While we began a big research project on localized development some 5 years ago and ultimately produced a report that’s launching this week, our journey really began in our twenties. We each spent several years working with low income neighborhoods and community based initiatives in Pakistan and India, respectively.As such, the idea that citizens, particularly those most disadvantaged in their societies, should have a say in decisions that affect their lives and their opportunities has been and remains central to our vision of development as well as our research. We have observed how individuals are transformed when given the chance to speak out against corruption and discrimination at village meetings. We have seen women empowered by the opportunity to form self-help groups and start small businesses. We know from direct experience that without real participation development can neither be effective nor pro-poor.
Since the 1990s, a large part of world savings have gone to institutional investors that manage those funds by investing around the world. Given this accumulation of resources in professional and sophisticated asset managers, one might expect to see significant international diversification accompanying this process. Yet, to date, little evidence exists on how institutional investors allocate their portfolios globally, and what effect their investment practices have on investors, firms, and policymakers.
In a new paper and VoxEU column, we argue that global funds (those that invest anywhere in the world) are not very well diversified, hold a very limited number of stocks (around 100), and seem to leave behind significant unexploited gains from international diversification. Thus, global funds might not constitute the optimal portfolio for individual investors. Moreover, there are significant challenges to the prospects for broad international diversification. To the extent that global funds continue expanding relative to the more specialized funds (those that invest in specific asset classes and regions), the forgone diversification gains could be significant, and the cost to investors, firms, and countries might be large as well, posing significant challenges to policymakers.
From the World Development Report 2013
621 million young people are “idle”—not in school or training, not employed, and not looking for work. Rates of idleness vary across countries, ranging between 10 and 50 percent among 15- to 24-year-olds.
This week a new forecast and analysis from the OECD highlights how, by around 2025, China's and india's combined GDP will likely exceed that of all the current Group of 7 rich economies. Read it here.
Mo Ibrahim, entrepreneur and billionaire, talks in a video clip about how the promise and risks inherent Africa's demographic bulge require bringing youth to the table when discussing not just jobs, training and places in top schools, but they should also be in on governance discussions.
The World Bank’s classification of economies as low-, lower-middle-, upper-middle-, or high-income has a long history. Over the years these groupings have provided a useful way of summarizing trends across a wide array of development indicators. Although the income classification is sometimes confused with the World Bank’s operational guidelines, which set lending terms and are determined only in part by average income, the classification is provided purely for analytical convenience and has no official status.
Not so long ago, those countries designated as “low-income countries” (LICs) in the World Bank’s World Development Indicators accounted for the bulk of the world’s poor, such as by the $1.25 a day standard. Today many very poor people live instead in what are called “middle-income countries” (MICs). The change seems dramatic. Almost all (94%) of those below $1.25 a day in 1990 lived in LICs. By 2008 the proportion was down to 26%, with the rest in MICs. Andy Sumner attracted much attention to this aspect of how the global profile of poverty has changed in his paper “Where do the Poor Live?.” Amanda Glassman, Denizhan Duran and Sumner dub this emergence of large poverty counts in MICs as the “new bottom billion.”
There has been much discussion about the implications of this change for overseas development assistance (ODA) and development policy more broadly. In particular, there have been calls for concentrating ODA on the LICs, assuming that the MICs can now look after their own poor.
But we need to look more closely at this “LIC-MIC” distinction, to understand why we have seen this change in the global poverty profile, and what relevance it might have for development policy.
eBay, an online marketplace, reduces the effect of distance on international trade by 65%, mainly through a reduction in information frictions that creates trust between market participants. As online markets help overcome market and government failures, the reduction in trade costs is larger where it is most needed: in remote countries with weak institutions that export information-intensive goods.
In the 1990s, many commentators believed that with advances in transportation and communication technologies, geographic distance between countries would soon no longer encumber international transactions. Frances Cairncross (1997) famously predicted the “death of distance”. But despite some anecdotal evidence in support of this prediction, a large number of academic papers has established that distance has been thriving, rather than dying.
Editor's warning: The author wrote this post after hitting his head and suffering some memory loss, and the World Bank cannot vouch for the accuracy of everything reported in it.
It was the perfect finale. In the vast high-tech auditorium of Beijing's International Convention Center, the audience jostled in the queue to pose questions to the final plenary panel of the Second Global Symposium on Health Systems Research.
First came an elderly lady from the Indian subcontinent who asked why the panelists were so old. "How can we address the issues of tomorrow with the experts of yesterday? If we're going to be serious about universal health coverage, we need youth!" The crowd -- mostly young -- signaled their approval. A middle-aged gentleman from South Africa tried to engage the panel on the damages inflicted on world nutrition by the global food corporations. Warming to his theme of corporate neocolonialism, land grabs, and genetically modified foods, he invoked the memory of Lenin. "That's Vladimir Lenin", he explained to the crowd, "not John Lennon." "Vladimir who? John who?" wondered the youthful crowd. The chair, the ever-youthful Lancet Editor-in-Chief Richard Horton, whose favored medium is Twitter, asked the gentleman to keep his comments tweet-length. A young woman from Britain's aid agency, DfID, eventually wrestled the mike from Lenin's apologist, and said what was on everyone's mind. "Richard, Dear Leader.", she urged, "Tell us your thoughts. It's you we want to hear!"
Following is the trancscript of Kaushik Basu's interview with CNBC-TV18, India, which first appeared on www.moneycontrol.com.
In an interview to CNBC-TV18, Kaushik Basu, chief economist, World Bank said the growth situation has to be taken seriously. "I do believe that, for India, there has to be all focus on growth."
Despite the fact that compared to the rest of the world, India is doing well, he said, it has the potential to get right back to 8.5 percent growth. "We have to put all hands on growth and try to get it back again up as quickly as possible," he added.
Q: You have been appointed as World Bank’s chief economist. So, the view from the inside has now changed to the view from the outside, has not it?
A: A little bit. Three months ago, I moved from the heart of Indian policymaking to seeing it from outside.
How do you measure unemployment? By counting the number of people looking for work but unable to find it. However, this measure overlooks people willing to work and not necessarily looking for jobs. In an interesting chart, The Economist illustrates how a broader measure makes unemployment in Europe look even worse.