Much of the attraction of ‘green’ growth to politicians and policy-makers is the apparent promise of job creation. Many developing countries face the prospect of rapidly growing labor forces, so measures that stimulate labor demand look attractive. But is the promise justified? That depends on how labor markets work and how ‘green’ growth policies are implemented.
As candidates for the presidency of the World Bank have been the focus of attention in recent weeks, divergent views have been exchanged regarding what ‘development’ actually is, how it should be conducted, and how efforts to bring it about should be assessed. Beyond the geo-strategic issues, how these questions are answered inexorably shapes what kind of leader one thinks should head up the world’s largest multilateral development agency, what kind of agenda that agency should pursue, and what kind of skills its staff should have.
Today's launch of the World Bank's Open Knowledge Repository (OKR) and Open Access Policy might not seem a big deal. But it is.
The knowledge bank’s assets are huge, but until today were hard to access
The Bank is a huge producer of knowledge on development. This knowledge surfaces in formal publications of the Bank – the institution publishes books and flagship reports like the World Development Report. It also surfaces in publications of external publishers, including journal articles – up to now, these external publications haven't been seen by the Bank as part of its knowledge output despite the fact they dwarf the Bank's own publications in volume and in citations. The Bank's knowledge also surfaces in reports, and in informal "knowledge products" like briefing notes and other web content.
Africa has launched a new wave of special economic zone or industrial park initiatives in recent years. Countries like Ghana, Nigeria, Ethiopia, Tanzania, Zambia, Mali, Botswana, etc., either have built some SEZs or are in the initial stages of building SEZs at various scales. While this seems to be an exciting development, it has to be dealt with great caution as well.
Growth to job creation to poverty reduction — that would be the ideal dynamic to get countries like Tanzania and Ethiopia on the track toward middle income country status. Yet, a trip to both places earlier last month that was focused on the promise of light manufacturing for Africa made it clear that the production line to prosperity can only be set up with the right incentives, with a smart but selective helping hand from the government.
Literary writers do not think much of the law. In the last century, Anatole France wrote, mordantly: “The majestic equality of the laws prohibits the rich and the poor alike from sleeping under bridges, begging in the streets and stealing bread.” More recently, Aarvind Adiga says, “The jails of Delhi are full of drivers who are there behind bars because they are taking the blame for their good, solid middle-class masters. . . . The judges? Wouldn't they see through this obviously forced confession? But they are in the racket too. They take their bribe, they ignore the discrepancies in the case. And life goes on.”
Within the Living Standards Measurement Study (LSMS) team, the anecdote goes that in the late 1970s World Bank President Robert McNamara, while reading through the first World Development Report, was stunned to discover that only a handful of countries were collecting any data for the reporting of poverty figures. He found this situation unacceptable and initiated an effort that among other things resulted in the creati
Like all fields of socio-economic measurement, there is scope for debate on how best to assess development progress. There is often much to be learnt from such debate.
But the debates are not always politically neutral. Some observers chose only to look critically at data and methods when the results diverge from their political priors. And some try to undermine evidence that does not fit their priors by questioning the motives of those producing that evidence. A generous interpretation might construe this as some “postmodern” approach to data, but on closer inspection it often looks more like a debating ploy to make up for weak substantive arguments.
I visited three African countries – Ethiopia, Rwanda, and South Africa– during my first week as Chief Economist at the World Bank in June 2008. Many visits to other African countries followed, but Ethiopia holds for me a special interest. I’ve just visited again, for a fourth time. While I am sure I will go back again after I depart the Bank on June 1 this year, this was my final visit to Africa as Chief Economist.
Over four years, I’ve seen Ethiopia gradually embrace structural transformation and its practical application. Leaders there are acutely aware that, if they are to maintain a robust growth rate (GDP growth has been around 10.5% on average over the past few years), they must move away from agriculture, the dominant sector, toward industrial upgrading and technological innovation, often by imitating economies just a few rungs up the economic ladder. Ethiopia’s agriculture sector is important and should not be neglected, but that alone won’t get the country onto a path toward middle income and finally to high income status.
Small firms are commonly believed to have weak access to finance. Previous studies have shown that small firms report larger financing obstacles and use less external finance than large firms do.
It is then a surprise to find in the new research we just published that small firms are significantly less likely to pledge collateral. Using the World Bank Enterprise Survey (WBES) covering 6800 firms across 43 developing countries, we find that all else being equal, the odds of small firms-- those with less than 20 workers-- pledging collateral for formal loans from financial institutions are about 35-37% lower than those of larger firms. Yet when loans are collateralized, the ratio of collateral value to loan value for small firms is not statistically different from that for larger firms. These results are robust across countries, or within a particular country. Given that small firms have weak access to finance, this is a counter-intuitive, yet interesting finding.