Over the last decade, Turkey has achieved relatively high economic growth at just over 5% per year. As was discussed in a recent blog post, this translated into broadly inclusive growth- not only did income grow for all segments of the population, but there were also improvements in a number of non-income indicators of well-being, including in health and education. Last week the OECD launched the latest results from its Program for International Student Assessment (PISA), a triennial international assessment that evaluates education systems worldwide by testing the skills and knowledge of 15-year-old students. This new data allows us to revisit the question of how Turkey has fared in terms of the performance of its education system in general and with regards to inclusiveness in particular. So what does the data tell us?
As we enter the holiday season, it is worth reflecting on one of the most pernicious slow-moving crises of our time: the continued presence of hunger in a world of plenty. Ending hunger by 2030 and protecting the right of everyone to have access to sufficient, safe, affordable and nutritious food is one of the targets proposed for the post-2015 agenda by the High-Level Panel on the Post-2015 Development Agenda, and many others are also promoting the same message. Pope Francis is the latest entrant into this debate with his announcement of a global campaign of prayer and action to end to hunger and malnutrition, “One Human Family, Food For All”. The campaign includes encouragement for local, national or global level action against food waste and the promotion of food access and security worldwide. The Pope prompts us all to ask ourselves, what will it take to end hunger?
When confronted with financial distress or some other difficulty, over 80 percent of Tanzanian families say they count on relatives and friends for the support needed to get through it. This is to be expected in African culture which is shaped by a strong sense of affinity with family and tribal ties.
However, in a poll conducted by the World Bank and Twaweza by phone in November, almost half of Tanzanian households also expressed that they expect to receive some help from their Government (see details in the fourth Tanzania Economic Update). In a world characterized by rapid urbanization and structural changes, government assistance is increasingly viewed as critical. In cities, especially, traditional ties and safety nets are generally losing their force. With economic progress, income disparities tend to widen. For example, the proportion of people living in extreme poverty (i.e. with barely enough resources to afford a 2,000 calorie diet) is only one percent in Dar es Salaam but over 15 percent in most rural areas.
Economist and Nobel Prize laureate James M. Buchanan remarked to the Wall Street Journal in 1996 that "Just as no physicist would claim that "water runs uphill”, no self-respecting economist would claim that increases in the minimum wage increase employment." Of course this statement remains broadly true today, but the advent of better data, improved statistal techniques and the proliferation of country studies – have made economists far more careful about pre-judging the impact of minimum wages on employment and wages. Indeed, in a now famous study of fast food restaurants in New Jersey and Pennsylvania, David Card and Alan Krueger showed how the imposition of a minimum wage had no significant disemployment effects, and in some cases increased employment, arising out of a large enough increase in demand for the firms’ products.
The evidence for South Africa, some twenty years after the demise of apartheid, is equally compelling. In a two-part study, my co-authors and I find an intriguing set of contrasting economic outcomes, from the imposition of a series of sectoral minimum wage laws. In South Africa, the minimum wage setting body, known as the Employment Conditions Commission (ECC), advises the Minister of Labour on appropriate and feasible minimum wages for different sectors or sub-sectors in the economy. Currently, the economy has in place 11 such sectoral minimum wage laws in sectors ranging from Agriculture and Domestic Work, to Retail and Private Security.
In a recent blog, our colleague Birgit Hansl adds her voice to the chorus of economists warning us of Russia’s coming deceleration. If she is right, this is especially bad news for Russia. If the recent past is an indicator of what may happen; this looming slump will have dramatic effects on the structure of the economy.
A slowdown in Russia means a wiping out of gains made during booms. Russia’s economy has experienced several booms and busts in the recent past. We found that young firms, even if they are efficient, were more likely to die off during a slump. Not so for incumbents. They had staying power independent of their relative efficiency. So much for the new blood that the economy needs to diversify!
Russia's economy is concentrated and dependent on the extraction of natural resources. Recent trends are not promising. Growth in Russia has been limited to a few sectors and to a few firms. Russia is much less diversified today than it was during the Soviet Era, both within and across sectors. The bottom quartile of the manufacturing sector, ranked by operating revenue, contributes 0.6 percent of total manufacturing output while the top quartile contributes 80 percent. In addition, the average share of output for the bottom quartile of firms (in terms of operating revenue) in a manufacturing sector is 0.06 percent while the share of the top quartile is 94.7 percent.
But when that same worker happens to cross a national border, we call it “migration” and, instead of celebrating, we start investigating the effects on workers, firms and public finances in the new environment; and on those left behind (the so-called “brain drain”). Instead of promoting structural transformation, we look for policies to manage it.
تتصدى دول التحول العربي التي تضم تونس ومصر واليمن وليبيا حاليا لقضايا معقدة تتعلق بالقيم الفردية، ومدى حرية التعبير، والحقوق الشخصية، والأمور العائلية التي تدور جميعا حول القضايا الجوهرية المتمثلة في الهوية والأدوار التي يلعبها الفرد والدولة والمجتمع. وهذه الحوارات الاجتماعية بناءة من حيث إنها تعكس ثراء الرؤى وتعددها في مجتمعات كانت مسايرة الموجة هي السمة السائدة في كنف النظم الديكتاتورية. لكن للأسف، تؤدي هذه الحوارات إلى الاستقطاب في المجتمع بما يؤدي إلى العنف والتهديد بالفوضى واحتمال العودة إلى الاستبداد. في الحقيقة، يعكس الاستقطاب الاجتماعي الحالي إلى حد بعيد محاولات السياسيين استغلال الانقسامات الاجتماعية، بل وتأجيجها، بطريقة تذكي حماس أنصارهم المحتملين لملء الفراغ السياسي الذي نجم عن رحيل طغاة العصر. وتختلف حالات الحراك التي يشهدها المغرب والأردن والجزائر ولبنان بعض الشيء، إلا أنه في هذه الحالة أيضا يؤدي التركيز المكثف والاستثنائي على الهوية إلى تزاحم التحديات الاجتماعية والاقتصادية بطريقة أكثر أهمية وأكثر سرعة.
The Arab transition countries, Tunisia, Egypt, Yemen, and Libya, are grappling with complex issues relating to personal values, the extent of freedom of speech, individual rights, family matters, that all orbit around deep issues of identity and the respective roles of the individual, the state and society. These social conversations are constructive in that they reflect a rich pluralism of views in societies where conformity was the rule under dictatorship. But unfortunately, these dialogues are polarizing society, leading to violence and threatening chaos and a possible return to authoritarianism. In fact, the current social polarization to a large extent reflects attempts by political entrepreneurs to use existing social fault lines, and even exacerbate them, in ways that mobilize passions among possible supporters, driven to over-reach by the political vacuum created by the departure of the historical autocrats. The dynamics in Morocco, Jordan, Algeria, and Lebanon are slightly different, but here too, the intense and exclusive focus on identity is crowding out more important and immediate social and economic challenges.
About a year back the Economist had an editorial piece titled "Out of the basket" and subtitled “Lessons from the achievements – yes, really, achievements – of Bangladesh.” The more in-depth piece that followed appeared somewhat bemused at how a country once labeled a ‘test case for development’ could have made such striking gains in development outcomes over the past two decades (see table 1). These gains were hard to reconcile amidst Bangladesh’s natural and Rana Plaza-type disasters, volatile politics and unfavorable rankings on governance indicators – themes which the Economist has often covered before, and after, this “achievements” piece.
This past week the Lancet has come out with a special issue on Bangladesh which the journal editors say is in order to “investigate one of the great mysteries of global health.” Specifically the published papers are meant to explore how “Bangladesh has made enormous health advances and now has the longest life expectancy, lowest fertility rate and lowest infant and under-5 mortality rates in South Asia despite spending less on health care than several neighbouring countries.” Both these publications help explain the various ‘Bangladesh paradoxes’ but they also overlook, or underplay, a few critical factors.
The US and European economies are showing some signs of recovery from the global financial crisis that began in 2008. As a result, the US Federal Reserve Bank is considering phasing out, or “tapering”, the extraordinary monetary policy measures through which it responded to the crisis. On May 22, Fed Chairman Ben Bernanke testified before Congress that the Fed may begin to reduce the size of its bond buying program. There was an immediate withdrawal by investors from stocks and bonds in emerging markets. The World Bank's East Asia and Pacific regional update estimated that in East Asia alone $24 billion was withdrawn from equities and $35.2 billion from bonds. Share prices fell by 24 percent in Indonesia, 21 percent in Thailand, and 20 percent in the Philippines. Yields on 10 year local currency bonds increased by 273 basis points in Indonesia, 86 basis points in Thailand and 76 basis points in Malaysia. The exchange rate depreciated by 18 percent in Indonesia, and about 5 percent in the Philippines and Thailand. Financial markets largely recovered once the Fed decided to postpone tapering in September, but there is still nervousness. The Indonesian Rupiah and Indian Rupee both fell significantly in November, till Fed Chair nominee Janet Yellen signaled that she saw a continued need for the bond buying program.
At some point the Fed will indeed begin to taper. Investors should clearly be concerned as there is a risk of sudden and dramatic falls in asset prices. Should policy makers be concerned? Will there be an impact on growth, inflation or macroeconomic risk that requires a response from policy makers?