The following post is a part of a series that discusses 'managing risk for development,' the theme of the World Bank’s upcoming World Development Report 2014.
One thing financial markets are good at is innovating and creating new instruments that meet the ever-evolving needs of investors and economic agents managing their risks (such as national or subnational governments). In the mid-1990s, after hurricane Andrew and the Northridge earthquake in the United States, it became increasingly clear that some risks were too big to insure with existing instruments. This matters most to governments and insurers who have to pick up the pieces after a natural disaster as the frequency and cost of natural hazards have been increasing over the past few decades.
In the aftermath of a natural disaster, governments have to shift budgetary resources away from new investments for development to relief and reconstruction efforts. For insurance companies, catastrophic events can put pressure on their financial viability. One way to relieve the pressure is to transfer such risks to capital markets. That is how catastrophe bonds (cat-bonds) were born, as financial instruments to further disperse the risk of natural disasters more broadly and use the risk-taking capacity of institutional investors worldwide.
Despite tremendous progress in poverty reduction over the last two decades, poverty still persists. Along with South Asia, Africa is a region where large numbers of people continue to live in extreme poverty. It is also a region where there is clearly room for higher foreign trade levels (see Chart). Given that trade can generate growth – and thus poverty reduction – focus on trade-related reforms (e.g. lower tariffs, better logistics, and trade facilitation) deserves to be a high priority of the region.
"The Web is quickly coming to the point that everything you say or do online can be used against you in the court of public opinion. Some say we could be looking at the end of forgetting, where the past can be accessed with the click of a mouse...We deserve something better: a Web that forgets."
-- Chris R. Albon. A political scientist and writer on the global politics of science and technology. He's also a Project Director at FrontlineSMS
On May 20, the JKP organized "Jobs and Shared Prosperity Day," which brought together development practitioners and researchers from numerous sectors and disciplines to exchange insights. We had sessions on a variety of issues related to jobs, such as youth, rights, skills, gender, enterprise dynamics, and the recent global financial crisis. We also took the opportunity to deliver the prizes for the Experiences from the Field, a contest that showcases projects aimed at creating jobs and improving employment possibilities.