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India's Service Revolution

Ejaz Ghani's picture

The post on 'Understanding India and China's success' is a nice summary of Professor Bardhan's key messages of ‘Awakening Giants, Feet of Clay: A China-India Comparative Economic Assessment.’ It debunks many myths, but it can not debunk an emerging trend that industrialization is no longer the only route to rapid growth and development".

I am sharing below a blog post I wrote for the Project Syndicate as well as a video of a panel discussion I participated in at the CATO Institute.  Happy to hear from readers.

From Project Syndicate:

 Click here to download the book (pdf).

China and India are both racing ahead economically. But the manner in which they are growing is dramatically different. Whereas China is a formidable exporter of manufactured goods, India has acquired a global reputation for exporting modern services. Indeed, India has leapfrogged over the manufacturing sector, going straight from agriculture into services.

The differences in the two countries’ growth patterns are striking, and raise significant questions for development economists. Can service be as dynamic as manufacturing? Can late-comers to development take advantage of the increasing globalization of the service sector? Can services be a driver of sustained growth, job creation, and poverty reduction?

Fighting Poverty at Each Stage of Development

Martin Ravallion's picture

One size does not fit all in development policy, as World Bank President, Robert B. Zoellick, emphasized in a recent speech, “Democratizing Development Economics.” The right policies depend on the stage of economic development (amongst other things). What does that mean for the Bank’s overarching objective, a world free of poverty?

Three construction workers return from a day of work as part of the Rural Roads project to improve access to markets in Rajasthan, India. Photo: Michael Foley

The Bank’s policy dialogues in poor countries have long emphasized policies to promote economic growth as the main means of fighting income poverty. These include efforts to ensure “pro-poor growth,” such as by avoiding policy biases against labor-intensive production.  However, direct redistributive policies in favor of the poor typically get far less attention.

It is not obvious why. Even some very poor countries have high inequality—in fact, some of the highest levels of income inequality in the world are found in poor countries (see the 2006 World Development Report: Equity and Development). And developing countries have redistributive policy options through tax and spending instruments (including cash transfers). There are concerns about trade-offs between equity and efficiency, though it can also be argued that high inequality is an impediment to economic growth. So should direct redistributive interventions play a bigger role?

Checking up on the assets of the knowledge bank

Adam Wagstaff's picture



Bhanwar Gopal, an artist from the Barefoot College, prepares traditional Rajasthani masks for plays and puppet shows with material from recycled World Bank reports. "We keep getting these reports that no one reads, so we decided to put them to some use," founder Bunker Roy says. [Source and image: BBC]

Regardless of its veracity (we’ll come to that in a moment), the BBC’s story raises a couple of serious questions. Exactly how much does the Bank publish? And does it have any impact?

The second question is, of course, hard to answer. But as Martin Ravallion and I found out when we tried to answer both questions, even the first isn’t easily answered.

Openness in the Service of Development, Results, and Poverty Reduction

Merrell Tuck-Primdahl's picture

Transforming the World Bank from a mid-20th century organization to an agile, 21st century entity motivated by a drive for ‘Open Development’ requires user-friendly shared data sites, a willingness to be held to high standards of transparency and accountability, a move toward telling results stories in compelling ways, and a ceding of ground from proud in-house research to ‘Democratizing Development Economics’.
All of the above requires both showmanship and visionary leadership, not something the staid World Bank is usually known for.

The 2010 Annual Meetings may be a tipping point where a giant bureaucracy shakes off a bit of the weight of its own rules and constraints and actually displays some agility, and, dare I say, a bit of color and plumage. Indeed, what delegates streaming to our Washington headquarters for this year’s Annual Meetings see may actually hit some of them like a jolt of development caffeine. 

This year, there is a “jumbotron” television screen facing Pennsylvania Avenue outside the Bank’s Main Complex greeting passersby and staff alike with compelling short films of results achieved by IDA, the Bank’s fund for the poorest. Entering the building’s sleek glass, metal, and stone atrium, visitors and staff see a new path of big, brightly colored circles highlighting IDA facts, spanning the entire Atrium floor, saying things like:

Eliminating poverty in old age: are social pensions the answer?

Jean-Jacques Dethier's picture

Poverty in old age is prevalent in a large number of Latin American countries. Universal minimum pensions would be an effective and administratively simple way to substantially reduce poverty among the elder generation.

Photo: © Charlotte Kesl / World Bank
Alleviating poverty in old age requires a different approach from other age groups. Since poverty reduction efforts through labor market or education policies are ineffective, the only available instrument is to directly transfer money so the elderly can purchase goods and services. In rich countries, pension systems transfer money from the rich to the poor and often include a minimum pension that contributes significantly to reducing poverty.  But in developing countries, pension systems have such a low coverage that they cannot deal with old-age poverty.  In Latin America, which has what social scientists call a “truncated welfare state” - with income redistribution for the better-off and exclusion for those in need—most poor people are not covered by pension systems.

Why ‘Securing Transformation’ matters in development economics

Justin Yifu Lin's picture

In his September 29 speech at Georgetown on ‘Democratizing Development Economics’, World Bank Group President Robert B. Zoellick insisted on the importance of ‘securing transformation’. The new structural economics approach to development, which I have proposed, aims exactly at that objective.

 Photo: © Simone D. McCourtie / World Bank
As I see it, ‘securing transformation’ highlights certain key features in the economic development process: the importance of endowments; different industrial structures atvarious stages of development and various distortions stemming from past, misguided interventions by policymakers whose belief in old structural economics led them to over-estimate governments’ ability to correct market failures.

Wholesaling Research for Development

Martin Ravallion's picture

“Give a man a fish and he will eat for a day. Teach a man to fish and he will eat for a lifetime.” K’ung Fu-tzu (Confucius) , circa 500 BC.

   Photo: istockphoto.com
The World Bank’s analytic work can lack transparency to users—not least for those who would be affected most by the policies derived from that work. Civil society groups often suspect that the Bank dresses up advocacy as analytics. This perception stems in no small measure from the large entry costs users face in replicating and understanding the analysis. 

This concern about how we do research at the Bank—and elsewhere—can be thought of as the outcome of a traditional “retailing model.” That means researchers investigate a specific issue over a period of time and produce a research product—a paper or volume—on their findings. This is then disseminated to the public, including other researchers and policy makers. 

Much has changed since this retailing model first emerged. Dramatic changes in information technology have expanded the use of data, which makes more openness in research feasible.

It is time, then, to think about a new “wholesaling model,” under which the emphasis switches to producing the tools for others to do the research and providing open access to those tools.

Welcome to ‘Let’s Talk Development’

Justin Yifu Lin's picture

As the world pulls out of an unprecedented financial crisis and given the wrap up just last week of the Millennium Development Goals Summit in New York, the work of the development community is far from over. In this context, the need for concerted, pragmatic research is more urgent than ever. Among the questions we need to ask is why many past efforts to get low-income countries on a path to sustainable growth have fallen short. Also, as we search for solutions, we need to adapt to the emergence of a multi-polar growth world and seek lessons from developing countries.  

With this in mind, it’s my pleasure to introduce this new blog aimed at sharing ideas and sparking innovation.

  Field visit to Nigeria
We at the Development Economics Department of the World Bank know that openness is what will keep us relevant and honest – the world is changing and it’s vital to challenge accepted wisdom. It’s essential to air the views of outside experts, even when they are highly critical.

Lively debate via this blog could potentially lead to break through solutions for development, or, at the very least, steer research and analysis in new directions.

Understanding India and China's success: not as straightforward as it seems

Vamsee Kanchi's picture

 

Pranab Bardhan, Professor of Economics at the University of California, Berkeley presented at the World Bank last week on his new book, ‘Awakening Giants, Feet of Clay: A China-India Comparative Economic Assessment.

Examining the Indian and Chinese economies, Bardhan set about debunking commonly held views on the economic drivers in the two countries and also their relationship with the rest of the World.  He offered unconventional insights, but also a cautionary note on future prospects.

Performance anxiety about the MDGs – are all poor countries lagging?

Delfin Go's picture

An old man, in Livingston, Zambia, stooped to scoop muddy water from a puddle into his pail. “What I want most is clean water,” he said, to me. I was conducting a World Bank field survey back in 2000 in Livingston. Even as the man expressed his desire for such a basic need, I could hear the roar of the mighty Victoria Falls just a few kilometers away. That was the sound of billions of gallons of fresh water, but not immediately drinkable. I never forgot the sound of it.

The extent to which people across the world have access to clean water, education, food, healthcare and other basic needs is measured by the Millennium Development Goals (MDGs), a set of internationally agreed targets adopted in 2000. Last week, world leaders and the developmental community gathered in New York for the MDG summit to urge the international community to speed up progress toward the MDGs.

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