Poverty Analysis

Market volatility, fears of a double-dip, lack of investor confidence and social demonstrations from Wall Street to Main Streets around the world are just some of the headlines we face today.

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For a time, it looked like the world was finally leaving behind the Great Recession that originated with the 2008 financial crisis in the U.S. and quickly spread to other major economies. At the core of the recovery: the developing world. While U.S. and euro zone GDP declined by 3.5% and 4.3% respectively in 2009, emerging and developing economies grew by 2.8%. One year later, that growth had accelerated to 7.3%, more than twice the growth of advanced economies.

Not only that. While unemployment in the U.S. climbed dramatically and is still around 9% , employment remained resilient in countries like Brazil and China. In fact, labor markets in East Asia largely escaped the crisis and employment indicators in Latin America had rapidly recovered by 2010 from the previous year’s contraction.

Gender inequality and discrimination can affect many areas of life, from a women’s access to basic health services to her prospects for education and future earnings. Accordingly, in order to overcome these disparities, development practitioners have begun to collect gender-disaggregated data and address gender elements in the design and implementation of aid programs. By “gender-informing” projects, development institutions, such as the World Bank, can better overcome discrimination, avoid aggravating existing inequalities, and enhance human capital for the future.

Indeed, adopting a gender-informed perspective can improve the effectiveness of many initiatives—not least of all those aimed at promoting trade. Unveiled this summer, the World Bank’s new trade strategy, Leveraging Trade for Development and Inclusive Growth, focuses on enhancing trade competitiveness and encouraging greater diversification in the sector (among other goals). Crucial to achieving these aims—as argued by the authors of the most recent Economic Premise—is to analyze the gender components of value chains, sectors, and labor markets in an effort to design and implement the most gender-informed initiatives.

As highlighted in “Gender-Informing Aid for Trade: Entry Points and Initial Lessons Learned from the World Bank,” Elisa Gamberoni and Jose Guilherme Reis show that “gender-informing” projects in the trade sector can have remarkable effects.

Istanbul is now at the center of the development action. In this splendorous city—where West and East converge—leaders from all over the globe have gotten together this week to assess the development results and challenges of the world’s poorest countries.

One of the goals of the 4th United Nations Conference on Least Developed Countries is to reduce the number of these nations from the current 48 to 24 over the next decade. And one of the things we can do to ensure this is to increase trade, and South-South trade in particular.

Some skeptics point out that the overdependence of low income countries on commodities and natural resources has limited their economic prospects. Or that it was precisely through trade and financial integration that the 2008 financial crisis was transmitted to many emerging markets, while poorer and less integrated economies remained isolated from the worst impact of the crisis. But the reality is that in the recovery from the crisis, trade is becoming a powerful engine for economic opportunity. And not in the traditional way. South-South trade is becoming increasingly important.

World Bank data shows that while demand in developed countries remains stagnant, trade among developing nations is growing. Between 1996 and 2006, South-South trade tripled—nearly half of imports to low- and middle-income countries now come from other countries like them. China is leading much of the recovery. While the OECD, a group of the wealthy nations, still accounts for most imports, its share has dropped from 69 percent to 59 percent in only 8 years.

What do call centers in Kenya, accounting companies in Sri Lanka, and human resources firms in Abu Dhabi have in common? From the surface, perhaps not much; but from an international trade perspective, these and other industries represent a fundamental change in how countries are doing business.

In the past, services such as customer service, IT, and accounting were viewed merely as inputs into the production of goods; today, these and other services have become exports for direct consumption, accounting for approximately 70 percent of global GDP. Why? Innovations in information and communication technology, paired with rapid global developments in the 3 Ts—technology, transportability, and tradability—have created a new channel of growth.

From call centers to medical records transcription to IT support, trade in services is becoming more sophisticated—that is, exported services are increasingly moving up the value chain. According to the authors of the World Bank’s Economic Premise edition of the week, “Sophistication in Service Exports and Economic Growth,” increasing service export productivity can have a profound developmental impact. To be sure, developing countries are becoming increasingly big players in the service export sector, where total service exports nearly tripled between 1997 and 2007.