Over the past several decades international trade has expanded dramatically. Today, the volume of world trade is nearly 32 times greater than its level in 1950, and the ratio of merchandise trade to global GDP has increased to more than 50 percent, up from less than 20 percent just half a century earlier.
Global food prices remain high and volatile, affecting the poorest countries the most. Global prices might not be at their 2008 record high, but they are still well above their levels a year ago. For millions who are already vulnerable, events like the droughts in the Horn of Africa add to their hardships while continued market turmoil increases uncertainty in the global economy.
The causes and effects of climate change are better known today than ever before.
Earlier this month, Japan experienced one of the worst natural disasters in its history, an earthquake and subsequent tsunami that claimed the lives of thousands of people and drastically changed the lives of countless more. Sadly, this tragedy is another in a string of natural disasters that have occurred over the past few years, such as the earthquakes in Haiti and Chile, wildfires in Russia, and floods in Pakistan, West Africa, Sri Lanka, Brazil, and Australia.
Increasing food and oil prices are making life miserable for millions of people. According to our World Bank estimates, the food price hike since last July has already pushed another 44 million people around the globe into extreme poverty –those living on less than US$1.25 a day.
We took advantage of the recent ABCDE conference in Stockholm during May 31-June 2, 2010 to hold side discussions with 15 high-profile academics and researchers. We were expecting that they would tell us that economic development thinking should be revisited in the light of the crisis, but surprisingly, the responses were that likely no.
By Dr. Jayanta Roy
Do you remember The Bottom Billion, Paul Collier’s 2007 book which became a classic? If you do, you will certainly like his latest work, The Plundered Planet. He came to launch his new book to the Bank this week, and I found it both fascinating and provocative. Let me give some examples of why.
Professor Collier, now the Director of the Centre for the Study of African Economies at Oxford University, declares a two-front war on economists and environmentalists at the same time. He is against what he calls “utilitarian economists,” because if left on their own, they would end up plundering the planet. But Collier also takes on “romantic environmentalists,” who would be unable to eradicate hunger in case they’re given the chance to rule the world. So as you can see, the book’s premises don’t really fit into the script of the blockbuster, Oscar-winning movie Avatar.
For Collier, who also worked as the Bank’s Research Director some years ago, Nature is the lifeline for the countries of the bottom billion – and thus cannot remain untouched. With a strong faith in the power of well-informed ordinary citizens, Collier proposes a series of international standards that would help poor countries rich in natural assets better manage those resources. Technology, which enlarges the capacity of ordinary citizens, is also necessary to turn Nature into assets. But of course, in order to be effective and benefit the bottom billion instead of just the few at the top, regulation, which requires governance, is another seminal element of the equation to create prosperity. If you leave regulation out of the equation, as some Libertarians do, the result is nature plundered. But if you end up with too much regulation – curbing the use of Nature – and thus preventing technology, then the result is hunger. And I’m certainly not one of those radical, romantic environmentalists who can imagine a bottom billion who is hungry but happy.