With William Kerr and Alexander Segura.
Developing countries have become much more globally integrated. On a global dimension, they now trade a lot more with other countries than they did two decades ago. Domestic connectivity at the country level has been helped through investments in road networks as urban and rural areas are becoming better connected not just through roads but phones lines and faster flows of knowledge.
How global and local connectivity influence spatial development and distribution of jobs is a tricky question. A naïve approach might look industry-by-industry at their exposure to trade or highways and ask what happens to the average wage in the industry as highways form. This approach, however, risks confounding several forces. It could be, for example, that a decline in the average wage represents a positive outcome if 1) those firms and workers who were already in the industry are experiencing wage growth, and 2) the industry overall expands to pull in workers from subsistence agriculture. A declining average wage can signify the second factor is dominating the first factor, but this might be cause for celebration by policy makers rather than a source of concern.
With William Kerr and Alexander Segura.
Anne Marie Slaughter of New America has a podcast on women's role in the Ukraine uprising.
Philanthropy News Digest reports on the launch of a new Gloldman Sachs-World Bank Group $600 million fund for women entrepreneurs.
How legal reforms improve women's welfare is a question being studied by World Bank economist Mary Hallward-Driemeier.
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The international media have recently put attention to laws against homosexuality adopted by several African countries. Sensible people have, quite rightly, expressed outrage over these laws, and the widespread homophobia behind them. World Bank President Jim Kim expressed his opinion against such discrimination deeming it bad for people and for societies. In a Washington Post opinion piece, President Kim shares his personal experience of being judged based on appearance and reminds us that discrimination is widespread: 83 countries in the world outlaw homosexuality; more than 100 countries discriminate against women; and even more countries have laws that discriminate against minority groups.
A recent research by Audrey Sacks, Safi Lakhani, and me indicates that negative attitudes toward various groups are widespread around the world. Although these things vary by country, immigrants, ethnic minorities, the poor, HIV-positive, and homosexuals are frequent targets of discriminatory attitudes—in developed and developing countries alike.
Sovereign Wealth Funds (SWFs) represent a large and growing pool of savings and an increasing number are owned by natural resource exporting countries. The funds have a variety of objectives, including intergenerational equity and macroeconomic stabilization. Traditionally they have invested abroad, increasingly in developing country assets, but always as part of a strategy to boost yields while remaining diversified. However, a recent trend sees an increasing number starting to invest in their domestic markets, including in infrastructure and other greenfield investments. Angola, Kazakhstan, Malaysia and Nigeria are examples; funds with a domestic investment mandate are also being established by Colombia, Morocco, Mozambique, Sierra Leone, Tanzania, Uganda and Zambia.
- sovereign wealth funds
In a new IMF paper, Jonathan D. Ostry, Andrew Berg, and Charalambos G. Tsangarides look into historical data to explore the relationship between inequality, redistribution, and growth and find little evidence of a “big tradeoff” between redistribution and growth.
Robert Chambers of IDS comments on the forthcoming World Development Report (WDR) 2015: Mind and Culture. He raises some important points on participatory thinking.
Trouble ensues when UCLA psychologist Joe Henrich steps into economics territory. Article by Ethan Watter for the Pacific Standard.
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The successful WTO Ministerial at Bali has placed trade facilitation in the spotlight, but it is export promotion that takes pride of place in most national trade policy agendas. Sometimes export promotion seems a virtuous exercise, targeting small firms most in need of help. The US Government’s efforts through its Small Business Administration or under the National Export Initiative are an example. At other times, it seems cold-bloodedly pragmatic, geared towards large firms most able to use assistance. Examples are government support for national champions from Brazil to South Korea.
The G20 Ministers of Finance and Central Bank Governors met in Sydney over the past weekend. An important outcome of the meeting is a commitment to lift G20’s collective GDP (which accounts for about 85 percent of world GDP) by more than 2 percent above the trajectory implied by current policies over the coming five years. This will amount to over US$2 trillion more in real terms. The higher growth would help generate significant additional jobs.
The targeted increase of more than 2 percent is based on a report prepared by the IMF with inputs from the OECD and the World Bank Group (WBG). The WBG contributions were prepared by a team drawn from various units and led by the Development Economics Vice Presidency. The report finds that with a feasible set of policy reforms, an increase in growth of that order of magnitude is achievable.
In our messy, multipolar world, daunting problems like responding to climate change, feeding a growing population, and fostering viable states in the wake of conflict were among the topics covered in yesterday’s conversation between Madeleine Albright and Kaushik Basu at the World Bank. Adding levity, the former US secretary of state also spoke of Kim Jong Il’s elevator shoes and bouffant hair, her role in lifting a ban on Iranian caviar, carpets and pistachios, and the byzantine math of the UN Security Council.
Kaushik held up an interesting mirror for Albright, given his own multidisciplinary perspective as a former economic policy advisor for India (a big cacophonous democracy), as a professor keen to ignite young minds to think creatively about the world, and as a big thinker at an international institution. Most fascinating to me were his questions about the moral imperatives that guided her decisions in the Balkans as well as her ability to grapple with everything from nuclear negotiations to sanctions to a tenuous mission to Pyongyang in October 2000.
Following is an abstract from World Bank Policy research working paper no 6779 by Norbert Schady (Inter-American Development Bank), Jere Behrman (University of Pennsylvania), Maria Caridad Araujo (Inter-American Development Bank), Rodrigo Azuero (University of Pennsylvania), Raquel Bernal (Universidad de Los Andes), David Bravo (Universidad de Chile), Florencia Lopez-Boo (Inter-American Development Bank), Karen Macours (Paris School of Economics & World Bank), Daniela Marshall (University of Pennsylvania), Christina Paxson (Brown University), and Renos Vakis (World Bank).
Research from the United States shows that gaps in early cognitive and noncognitive abilities appear early in the life cycle. Little is known about this important question for developing countries. A recent World Bank owrking paper, Wealth gradients in early childhood cognitive development in five Latin American countries, provides new evidence of sharp differences in cognitive development by socioeconomic status in early childhood for five Latin American countries. To help with comparability, the paper uses the same measure of receptive language ability for all five countries. It finds important differences in development in early childhood across countries, and steep socioeconomic gradients within every country. For the three countries where panel data to follow children over time exists, there are few substantive changes in scores once children enter school. These results are robust to different ways of defining socioeconomic status, to different ways of standardizing outcomes, and to selective non-response on the measure of cognitive development.