Blog #8: In building and agri boom, rural wage lift
India is home to the largest number of poor people in the world, as well as the largest number of people who have recently escaped poverty. Over the next few weeks, this blog series will highlight recent research from the World Bank and its partners on what has driven poverty reduction, what still stands in the way of progress, and the road to a more prosperous India.
We hope this will spark a conversation around #WhatWillItTake to #EndPoverty in India. Read all the blogs in this series, we look forward to your comments.
Real wages have risen across India in the past two decades, but the increase was especially marked among rural unskilled workers. Three drivers – falling rural female labor force participation, a construction boom, and favorable agricultural terms of trade -- help explain why unskilled rural workers fared better than their urban counterparts or workers with more education. Going forward, in light of lower agricultural prices and slower growth in the construction sector, some of the factors that contributed to the increase in relative wages for unskilled labor during this period may not be sustained over time.
If there’s one common theme that resonates across Western democracies this past year, it’s a rejection of the status quo. Some outsider politicians have ridden this wave of populism to political office or to strong second-place finishes, stretching the boundaries of political expression. Frustration, anger with the status quo, globalization and the tradeoffs that come with it, and inequality are all basic concerns of the voters catapulting these politicians to power.
Globally, it also seems that fault lines have been erected between cultures, religions, genders, and so on.
Regardless of where the frustration comes from, though, polarization along ideological lines and negative rhetoric are pervasive. While polarization is a complex issue (and not something we can explain in its entirety in a blog post), how people process information is a significant factor.
If people are not open to other viewpoints or do not think critically about the negative rhetoric they encounter— which often involves self-reflection— then how can change really be achieved? How can the frustration fueling the polarization be addressed if we cannot compromise?
In 2014, money transfer operators sending funds to Somalia were coming under increasing pressure. Western financial institutions, concerned about money possibly ending up in the hands of terrorists or persons on sanctions lists, decided the risk was too high and started pulling out. Although one channel remained open, the situation was so acute that the World Bank and the Somalia Multi-Partner Fund decided to take action and create a fallback position in case that last channel, too, should close. A scenario in which the Somali diaspora had no legitimate way to send money home to their families would have been devastating to Somalis who depend on these funds for their basic needs.
Global development as a universal objective to improve people’s social and economic wellbeing is a relatively recent concept.
It was first embodied in the United Nations Charter, signed in San Francisco 71 years ago this week, which stated: “the United Nations shall promote higher standards of living, full employment, and conditions of economic and social progress and development.” In time, at least among practicing economists in academia and policymakers in government, “development” came to be seen as improved economic opportunity through the accumulation of capital and rising productivity.
Kyaw San has trouble studying at night. The student from Yangon Division’s Buu Tar Suu village finds it especially difficult during the rainy season when his old solar-powered lamps cannot be charged, forcing him to study by candlelight.
Win Win Nwe, a grade 5 student, also often prepares for exams by candlelight. Her family can’t always afford to buy candles, adding another obstacle to an activity many take for granted. “If we can afford candles, we buy them. If we can’t, we don’t. We struggle and do our best,” said her father Kyi Htwe.
Today, two-thirds of Myanmar’s population is not connected to the national electricity grid and 84% of rural households lack access to electricity. No power means no light, no refrigerators, no recharging phones and batteries. Small businesses can’t stay open in the evenings, and clinics cannot refrigerate medicines. Access to reliable and affordable energy is essential for a country’s development, job creation, poverty reduction and shared prosperity goals.
Since the 1990s, inequality has risen faster in Indonesia than in any other East Asian country apart from China. In 2002, the richest 10 per cent of households consumed as much as the poorest 42 per cent. By 2014, they consumed as much as the poorest 54 per cent. Why should we be worried about this trend? What is causing it, and how is the current administration addressing rising inequality? And what still needs to be done?
Inequality is not always bad; it can provide rewards for those who work hard and take risks. But high inequality is worrying for reasons beyond fairness. High inequality can impact economic growth, exacerbate conflict, and curb the potential of current and future generations. For example, recent research indicates that, on average, when a higher share of national income goes to the richest fifth of households, economic growth slows—whereas countries grow more quickly when the poorest two-fifths receive more.
“Don’t waste your time in local breeding programs if someone else can improve the seed for you. We are a small country and cannot afford to reinvent the wheel”. This was the pragmatic advice of a Bhutanese agro-scientist visiting Bolivia a few years ago. His statement might be true, especially in resource-limited countries. However, I strongly believe that implementing agricultural innovations requires bridging the global with the local in a two-way partnership, with strong capabilities in the field. Here's a good example.
My father holds a special place in my heart – and with Fathers Day this past Sunday, I want to give a shout out to my dad (now long gone) and share a story about him.
One summer afternoon when I was about nine years old, I was in the kitchen of our house in an un-named tropical country. I heard a rap at the back door. I peeked out – a man I didn’t recognize stood there. He thrust a small white envelope he’d been holding into my hands and rushed off.
I turned the envelope in my hands curiously – it was creased – as if it had been folded in a pocket- and it was sealed, and my dad’s name was written on it in blue ink. When my dad got home, I gave him the envelope and explained how it had arrived.
He took it from me and went to his room and changed, and a little while later he came back with the open envelope in his hand. We sat together on the porch, as we sometimes did. Dad looked both thoughtful and angry. After a moment, he said, “I want to share something with you; it’s upsetting but important, and I think you’re old enough to be told.”