Resource rich nations face unique challenges when attempting to move from low to high value added activities.
Resource sectors (such as mining and oil) tend to be highly capital intensive and offer limited employment opportunities to accommodate workers exiting from other sectors with lower average productivity, such as agriculture and informal services.
Childbirth is a time for expectant mothers to revel in the wonders and joy surrounding the arrival of a new human being; one breathing crisp new air, bawling with resonance in finding their voice and opening their eyes in awe to see the world around them. It’s the last conceivable moment where a mother wants to worry about the cleanliness of the birth facility, the baby’s life and, least of all, her own life. But in many developing countries including Nigeria, this is the reality.
Figure 1: Poverty and inequality in rural China
Advances in earth observation, computing power, and connectivity have tremendous potential to help governments, and us at the World Bank, support better land management, and ultimately reduce poverty and promote shared prosperity.
There are three ways in which these technologies profoundly change the scope of our work.
Factor Allocation and Growth
A central challenge for developing countries is to promote growth by reducing the misallocation of factors of production—labor, capital and land. While there may not be such a thing as a perfectly efficient factor allocation, evidence shows that there are huge gains in growth from reducing factor misallocation. Growth requires more efficient firms to produce more output and use more factors of production. Our past work has shown that land allocation is barely better than random at best, and probably worse than random in India. Put differently, low productivity firms have better access to land and buildings than high productivity firms. Indeed, land and buildings misallocation appears to be at the root of much of the misallocation of output and it accounts for a large share of the observed differences in output per worker in the manufacturing sector.