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Growth Escalators, Convergence, and Divergence

Ejaz Ghani's picture

The literature on growth convergence and divergence is vast and deep. Some have argued that divergence is persistent. Lant Pritchett in his paper, “Divergence, Big Time” has argued that backwardness appeared to carry severe disadvantages that generated long-term divergence between growth in per capita incomes of developing countries compared to rich countries. Others have found evidence in favor of convergence. Arvind Subramanian, in his paper, “The hyperglobalization of Trade and its Future”, has argued in favor of convergence, since the number of developing countries experiencing catch-up has more than trebled (from 21 to 75 countries) and the rate of average catch-up has doubled from 1.5 percent per year to over 3 percent. However, what has been overlooked in this debate is the role that agriculture, manufacturing and services have played in growth convergence/divergence. Which of these sectors have played a bigger role in growth convergence?

The Trade Stakes of WTO Disputes

Chad P Bown's picture

The WTO will soon initiate its 500th formal dispute, and discussions of such international litigation are now a media mainstay. Last Thursday, for example, the WTO’s Appellate Body released its latest ruling, upholding most of a set of legal challenges to China’s use of export restrictions on “rare earth” materials, a set of intermediate inputs important for green technologies such as wind turbines, batteries for gas-electric hybrid cars, etc. Other recent examples of formal WTO litigation in the news include the EU’s challenge to Russia’s import restrictions on vans, the US’s challenge to Chinese barriers to autos, and Canada’s and Norway’s challenges to an EU ban on trade in seal products.

Friday roundup: US-Africa Summit, Carbon Reduction and Demographics, Poverty, Robots, and Fair Trade

LTD Editors's picture

US-Africa Summit garners over $17b in pledges and calls for a deeper economic relationship.

In a New York Times article, Eduardo Porter writes about curbing population growth as a way to reduce carbon emissions.
 
Economic growth may be the best way to overcome poverty and reduce social ailments, says The Economist.

Inequality of opportunity: the new motherhood and apple pie?

Adam Wagstaff's picture

On the face of it, questioning the usefulness of “inequality of opportunity” seems about as wrongheaded as questioning the merits of family vacations, Thanksgiving or dessert trolleys. What’s not to like about it? Well, as we argue in a recent World Bank working paper, the idea is not quite as useful as it might at first glance appear, and is in fact rather dangerous. But turned upside down, it might yet be useful.

A simple idea – let’s see some numbers

The idea behind inequality of opportunity is simple yet powerful. Not all inequality is bad. The bad bit of inequality (‘inequality of opportunity’) is the part that emerges because of factors over which we have no control (our 'circumstances'). By contrast inequality that emerges because of our different choices and efforts (holding constant our circumstances) is fine, and to be encouraged.

Do Cash Transfer Programs Lower Child Labor?

Do cash transfer programs - social protection programs that provide income to poor households often on the condition that children in these households attend school - lower child labor? Answering this question is important for a variety of reasons. Child labor is widely prevalent. According to the latest estimates of the International Labour Organization, about 10% of the children aged 5 to 14 worldwide are engaged in economic activities, often despite national child labor regulation prohibiting their involvement in work. Participation in child labor is often feared to affect children's ability to learn in school, to affect their health both in the short and long-run, and to result in negative externalities. And, while cash transfer programs are currently operated by many countries around the world and many of them target populations with high child labor prevalence rates, in theory their effect on child labor is ambiguous.

Were the poor left behind by the health MDGs?

Adam Wagstaff's picture

Thanks to Thomas Piketty, we’ve heard a lot this year about rising inequality. And with just over a year to go before the MDG ‘window’ closes, we’ve also heard a lot about the ‘post-2015 agenda’. In a paper with Leander Buisman that just came out in the World Bank Research Observer, we bring these two themes together and ask: “Were the poor left behind by the health MDGs?” Influenced perhaps by all the talk of rising income inequality, there are certainly plenty of pessimistic folks out there who think that health inequalities, too, are on the rise; that the better off are likely to have seen much faster improvements in MDG indicators than the poor.

The Infrastructure Opportunity

Jonathan Woetzel's picture

Under-investment in infrastructure can cripple lives. Across the world, 1.3 billion people have no access to electricity, 2.5 billion do not have adequate sanitation, and a further 2.5 billion rely on the traditional use of biomass for cooking. Building adequate infrastructure is a vital tool of social development. But it is also a crucial underpinning of economic growth. McKinsey estimates that the world needs to invest $57 trillion in infrastructure between 2013 and 2030 simply to keep up with projected global GDP growth. That’s more than the total estimated value of the infrastructure already on the ground today.

Friday Roundup: Human Development Report, LinkedIn Economic Confidence Outlook, Inequality, and Jason Furman

LTD Editors's picture

The 2014 edition of the Human Development Report was released yesterday. The latest report focuses on promoting people’s choices and protecting human development achievements. 

LinkedIn’s Economic Confidence Outlook predicts scattered optimism for the future of the global economy.  The survey, conducted in the first quarter of 2014, of more than 14,000 senior business leaders on LinkedIn in 16 different countries around the world is designed to gauge leaders’ confidence level in the global economy and their country. 

Making Development Edutaining

Swati Mishra's picture

Development is not easy; making it sustainable, even more difficult. Take for example road traffic rules. We can build better roads and install traffic lights, but cannot guarantee adherence to traffic rules. Even with laws in place, people may be more willing to pay fines than stop at a red light or wear seat belts. How do you make people value their own lives or their betterment? To succeed, we have to motivate people rather than just educate them.

Jason Furman speaks on inclusive growth in the US

Vamsee Kanchi's picture

Jason Furman, appointed by President Barack Obama as the Chairman of the Council of Economic Affairs, spoke yesterday at the World Bank about inclusive growth in the US. Furman said that average income for the bottom 90% grew strongly across all OECD countries starting in the 1950s, but has flattened in the US since the ‘70s. Furthermore, Furman added that capital income contributes more to overall inequality towards the upper end of the American income distribution.

Furman also pointed out that starting in 2000, labor share in US income started falling, largely because of globalization.

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