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It’s Hard to Say Goodbye

Tina Taheri's picture

When we launched Future Development almost a year and a half ago I didn’t anticipate it would take over my life the way it did and right now I feel as if a dear friend was leaving for a different country…. That friend is the Future Development Blog which is changing its host organization from the World Bank Group to Brookings Institution.

It was a difficult decision but as with everything in life change is hard but often for the best; so this is the moment I say goodbye. Since September 16th 2013, the Future Development platform has been the first thing I check and the last every day of the year without exception; and now someone else will be taking over this task.
When we started this project, our firm belief was that countries can only achieve shared prosperity if they develop their policies through evidenced-based conversation with their citizens, so our main purpose with the creation of this blog was to empower all engaged citizens to hold their governments to account more successfully so that they take decisions in poor people’s interest and not their own.

From Imitating to Innovating

Marcin Piatkowski's picture

Time to Change Gears for Poland’s Economy

Poland is Europe’s growth champion. It has more than doubled its GDP per capita since the beginning of post-socialist transition in 1989, consistently growing since 1992, and was the only EU economy to avoid a recession in 2009. Poland is a prime example of the success of the European “convergence machine”. In 2014, the level of income adjusted for purchasing parity exceeded $24,000 and reached almost 65% of the level of income in the euro zone, the highest absolute and relative level since 1500 A.D.
However, past successes do not guarantee a prosperous future and Poland cannot afford to grow complacent. Given the significant productivity gap—Poland’s productivity per hour amounts to less than half of that in Germany —technology absorption will continue to drive private sector productivity in the near term, but it is unlikely to help sustain—not to mention accelerate—economic growth in the long term as Poland moves closer to the technology frontier. Investment in private sector R&D and innovation will have to increase far more rapidly. Growth can stagnate if Poland doesn’t start shifting from imitating others to generating new ideas, from quantity to quality, and from potato chips to microchips.

Future Development Forecasts 2015

Shanta Devarajan's picture

Despite their mixed record last year, Future Development's bloggers once again offer their predictions for 2015.  Eight themes emerge.
1. Global growth and trade. The US economy will strengthen far above predictions. Together with lower oil prices and a better business climate in emerging markets, this will create substantial positive spill-overs, including to the smaller export-oriented Asian economies, boosting the growth of their manufactured exports well above recent trends. The US will look to open new free trade agreements in Asia—India may try to join—and seek opportunities to do the same in Africa. Meanwhile, Germany will face increasing resistance to the free-trade agreement with America (TTIP), just as Angela Merkel celebrates her 10th year in office.

The Decline in Oil Prices: An Opportunity

Ivailo Izvorski's picture

A decade of elevated oil prices brought prosperity to many developing countries. Incomes rose, poverty shrank, macroeconomic buffers were rebuilt. The fiscal space for investing more in education and infrastructure increased, resulting in better sharing of prosperity. At the same time, higher commodity prices and surging global demand resulted in much more concentrated exports in all developing oil-rich countries. "Diversifying exports" became a priority for policy makers and development economists around the world. Historical experience and evidence to the contrary from successful resource rich countries notwithstanding, many widely believe that a more diversified export structure should be an important national goal and may well be a synonym for development, a goal that government can target and achieve.  And a more diversified export structure typically meant a smaller share of commodity exports in total shipments abroad or a reduced concentration – as measured by the Herfindahl-Hirschmann index – of exports.

How Well did We Forecast 2014?

Shanta Devarajan's picture

A year ago, we polled Future Development bloggers for predictions on the coming year (2014).  Looking back, we find that many unforeseen (and possibly unforeseeable) events had major economic impact. 

We missed the developments in Ukraine and Russia, the spread of the Islamic State in Iraq, the outbreak of Ebola in West Africa, the collapse in oil prices and their attendant effects on economic growth.  At the same time, we picked the winner of the soccer World Cup, and got many of the technology trends right. Perhaps economists are better at predicting non-economic events.

Here’s the scorecard on the seven predictions made:

All About My Age

Wolfgang Fengler's picture

And Why I’m Much Older than I Thought I was
When my kids became teenagers I began to feel old: I saw myself as fit, healthy and (relatively) young but they, clearly, didn’t and it began to be un-cool to be around them. I’m now in my 40s in a world that is growing older and older (the global life expectancy is now at 72) … so what’s the big deal?

I may be young in absolute terms but definitely not in relative ones! If you’re my age – 43 years – there are 5.1 billion (in a world of almost 7.3 billion) youngsters for whom that’s old. Seen otherwise, you are part of the world's 30 percent oldest people! It was a long time ago that I was in the middle of the global age distribution: today the “median human” is only 29 years old.

Can Pay for Performance Provide the Wrong Incentives?

Tito Cordella's picture

Office workers in a meeting The use of technology to improve productivity continues to evolve. In Modern Times, Tramp had to keep up with the crazy pace of the assembly line; in contemporary public administrations, employees have to comply with what is mandated by monitoring and reporting technologies; in today’s World Bank — I’m exaggerating a bit — we are asked to record everything we do in the multiple Bank systems. A legitimate question to ask is whether the reliance on monitoring and reporting technologies improves service delivery or, instead, whether it forces motivated civil servants or employees to waste time “feeding the beast”.

The Impact of Falling Oil Prices

Birgit Hansl's picture

 Notes from Russia and Kazakhstan

Petrol tanker driving along the rural road in Russia Oil prices tumbled dramatically since July when they reached US$115 per barrel to below US$65 per barrel in recent days. Despite the sharp price decline, OPEC signaled no intention to cut production.  The oil market remains well-supplied and there is demand-driven pressure on oil prices, following weak economic data from the Euro zone and a number of emerging economies, including Turkey, Brazil, Russia, and China which means that the oil price could fall even further and remain low for longer.

The economic prospects of many resource abundant economies are tied to oil prices. Russia and Kazakhstan are two extreme cases. Such dependency translates into volatility of export receipts and government revenues and, depending on the exchange regime, to a decline in the national currency. For Russia, oil and gas provide about 70 percent of its exports and 50 percent of its federal budget. In Kazakhstan, oil revenues constitute about half of government’s total revenues and 45 percent of foreign exchange earnings.

Lessons from Reducing Energy Subsidies

Mamta Murthi's picture
Also available in: Română

A view from Central Europe and the Baltics

Energy subsidies are common throughout the world.  The bulk of subsidies are paid in the Middle East and North Africa where my colleague, Shanta Devarajan, has eloquently blogged about their corrosive impact on economic growth, on employment, on human health and on water conservation.  Where I sit, in Central Europe, many countries are in the process of liberalizing their market for energy and bringing subsidies to an end.  What lessons does the experience of energy price liberation in this group of countries offer to their neighbors in the south?  Based on the work of my colleagues, Nistha Sinha and Caterina Ruggieri, I would draw five lessons.

Budget Rules for Resource Booms - and Busts

Shanta Devarajan's picture

Oil pumps The recent, precipitous decline in oil prices (35 percent so far this year) has revived the question of how oil-exporting countries should manage their budgets.  These countries’ governments rely on oil revenues for 60-90 percent of their spending.  In light of the price drop, should governments cut expenditures, including growth-promoting investment expenditures?  Or should they dip into the money they saved when oil prices were high, and keep expenditures on an even keel? Since oil prices fluctuate up and down, governments are looking for rules that guide expenditure decisions, rather than leaving it to the politicians in power at the time to decide whenever there is a price shock.  The successful experience of Norway and Chile, which used strict fiscal rules to make sure that resource windfalls are saved and not subject to the irresistible temptation to spend, is often contrasted with countries such as Nigeria and Cameroon, which didn’t.