A daunting development challenge will confront us for the next decade: More than 1 million jobs per month – every month, for a decade or more – will need to be created to raise the living standards of the 2.6 billion who live on less than $2 per day, and the billions who will soon try to enter the paid workforce amid one of the greatest demographic surges in human history. Job creation in the public sector is expected to be flat, at best, so most of the needed jobs will have to be created by the private sector. But how?
Focusing on the macroeconomic agenda is necessary but insufficient. Most countries have rolled out macro-level reforms, but policymakers increasingly argue that the macro policy agenda must be complemented by targeted growth programs focusing on specific industries and value chains. Policymakers urgently seek practical solutions to meet the job-creation challenge.
Last week the World Bank launched a new approach to fostering green innovation called the Indonesia Green Innovation Pilot Program. Its aim is to learn how open innovation principles can foster the generation of market-based solutions to clean energy. A core team of designers (Catapult and Inotek) will work with rural communities, the public and private sectors to design clean energy solutions that can be adopted by the market. Keeping in line with open innovation, its first activity is to identify challenges or “problems” that will be addressed by the program through a crowdsourcing approach. So if you are in any way familiar with rural communities and energy issues in Indonesia, the program invites you to submit a challenge here until March 17.
But, if you think coming up with the kind of technology required to tackle climate change will require something akin to a Manhattan Project, rest assured, you're not alone. Googling "climate change" and "manhattan project" returns a whopping 1,540,000 results. But what does creating a "Manhattan Project" really mean? Besides uncomfortable thoughts of human-inflicted destruction, sheer scale is the first thing that comes to my mind. At its peak, during World War II, the US government employed 130,000 people in the Manhattan Project to develop the atomic bomb. The project's size together with several other features made it a classic case of what I would call "brute-force innovation": it was centrally-planned, closed, and science-driven. Even though the project included research teams across different universities, public research labs and companies across the United States, nothing was leaked in or out and each team had a very specific assigned task and plan. Through the Manhattan Project the government spearheaded the research, developed, testing and deployment of a revolutionary technology from start to finish over a span of four years. And there were no startups, spin-offs, royalty incentives, public-private-partnerships, venture capitalists, crowdsourcing, first-mover advantage, standard-setting or IPOs. Basically none of the buzzwords we associate with disruptive innovation in the 21st Century.
Ambitious and fast rising—these words aptly describe modern Indonesia. Amidst a global economic slowdown, Indonesia was the third fastest growing economy among the G-20 for 2009 and it continues to post strong economic growth, at a projected rate of 6.4% for 2012. Improving economic competitiveness by creating a more salutary business climate is one of Indonesia’s national priorities for 2010 to 2014.
Indonesia is walking the talk. Doing Business in Indonesia 2012 launched January 31 in Jakarta, finds that all 14 cities previously measured in Doing Business in Indonesia 2010 have improved business registration processes over the last two years, while 10 out of 14 cities expedited the approval of construction permits. During his keynote address on the launching of the report, the Minister of State Ministry for Administrative Reforms talked about the cities moving from 'comfort zone' to 'competitive zone'.
I pay through the nose for health insurance for my family, and I’m not happy about it. As a U.S. citizen, I don’t have the luxury of government-backed healthcare. Since I’m technically self-employed, I have to pay the full premium myself. Want some figures? It costs me $830 a month for a family of four, with a high deductible. Besides being expensive, it takes a huge effort to deal with insurance issues, and I find that my provider is expert at finding reasons not to reimburse me for medical expenses. This is chewing a gaping hole in my budget. The only way I’ll ever get value for my money is if I’m hit by a bus.
Few would dispute China’s importance to the world economy today; from small villages to large cities, its presence is now felt almost everywhere. The Economist recently went so far as to call China “the indispensable economy,” reporting that more and more multinational companies are realizing an increased share of their revenues from inside Chinese borders. China has also become the largest export destination for many countries in the northern and southern hemispheres. Yet with this focus on China’s large market size, economic growth, and ability to attract inbound trade and investment, less attention is being paid to the role of its private sector and outbound foreign direct investment (FDI).
The Chinese private sector is increasingly also playing an important role in the world today. In nearly any country you travel to these days you can feel the presence of Chinese business. New data backs up this story. Though China still trails the United States (a whooping 5,450 new outbound FDI projects in 2010) and other traditional outbound FDI leaders (UK, Germany and Japan) by a long distance in absolute numbers (Figure 1), according to the Financial Times fDi Markets database, it reported the fastest year-on-year growth for the last five years in outbound FDI projects (23% compound annual growth rate (CAGR)) of any major industrialized economy.
The day has finally come—my last day at IFC, after nearly 14 years. In a few days I'll be leaving Mongolia. My next stop is Ukraine, which will become a base for my work as a short-term consultant. My family moved there six months ago, and now it's time for me to join them.
Mongolia has changed a lot since I arrived in May 2008. At the time there was uncertainty about Mongolia's path going forward, both economically and politically. Only one month after I arrived there were post-election riots which left five people dead and shook confidence in the country's stability. Investors were also wary: a key agreement with Rio Tinto over the development of the Oyu Tolgoi copper and gold deposits dragged into another year without resolution.
These questions have since been put to rest. The presidential election in May 2009 saw a peaceful transition of power to the opposition party, and the long-awaited agreement with Rio Tinto was signed in October of the same year. The Government also took concrete steps to improve the business and investment climate, which IFC supported through its Business Inspections Reform and Corporate Governance projects. Investor interest in Mongolia has increased, and Mongolians have a much brighter outlook for the future of their country.
This is my third summer in Ulaanbaatar. Summers here are great - the weather is perfect, outdoor cafes abound, and the young take the opportunity to show themselves off (if they can get away with it). It is no accident that my assignment at IFC is ending in September rather than in May.
But this summer, I've noticed something different, a phenomenon unobserved during the previous two summers: extremely pregnant women. Hundreds of them. They seem to be everywhere - on every street, in every restaurant, in every office, including our own. Sometimes, for fun, I start counting until I pass a pregnant woman on the street. I never get beyond 45.
Inquiring minds want to know: Why might this be? It so happens that I have a theory.
The PSD Blog is going on an end-of-summer hiatus for the next two weeks. While we're away, check out our most popular posts from August if you missed them while at the beach:
When I applied for work at the International Finance Corporation way back in 1996, I had no idea that the battle against poverty would involve so many bucket baths, or that I would be taking them throughout my career.
It started with my very first assignment, in Sumy, a town of 300,000 in Ukraine. My water was heated by a frightening device, now rarely seen, called a kolonka, which was a metal box in your bathroom that heated water by gas. A good kolonka worked well; when you turned on the hot water tap, the device would fire up and provide enough hot water to take a shower or wash dishes. But my kolonka only worked if the water moved through it at a trickle, making a shower impossible. So every morning, I would slowly fill my red plastic bucket with hot water and take a bucket bath before heading off to do IFC business.
Commenting on a post I wrote last month on randomized control trials (RCTs), Scott Guggenheim, a Lead Social Development Specialist at the World Bank, points out the practical value of this approach:
I've worked closely with several of the JPAL people to carry out randomized evaluations of our big community development programs in Indonesia and Afghanistan over the years. These evaluations have been extremely useful for improving our programs, and they've done it through findings that were both counterintuitive and which almost certainly could not have been obtained any other way. To cite one example, we did a big, RCT study on what reduces corruption in community programs. Whereas my entire team thought that increasing participation and transparency would be most effective, in actual fact increasing the frequency of locally publicized audits had far greater effects. That finding has now translated into a revised audit policy and procedure for $1.7 billion/yr in CDD investments. Surely this sort of work is both constructive and useful for development programs. Other RCTs are looking at what can improve community-state interactions in Afghanistan, MDG performance in Indonesia's poorest villages, and what incentives will lower police extortion. Again, surely these are positive and relevant -- and where it's important to be sure that we've nailed the right factors that explain them before we urge governments to translate them into national policies.
The whole comment is worth reading. Guggenheim is an authority in the field of social capital and community development, having done pioneering work in Indonesia via the Kecamatan Development Project.
Focusing on the macroeconomic agenda is necessary but insufficient. Most countries have rolled out macro-level reforms, but policymakers increasingly argue that the macro policy agenda must be complemented by targeted growth programs focusing on specific industries and value chains. Policymakers urgently seek practical solutions to meet the job-creation challenge. 
But, if you think coming up with the kind of technology required to tackle climate change will require something akin to a Manhattan Project, rest assured, you're not alone. Googling "climate change" and "manhattan project" returns a whopping 1,540,000 results. But what does creating a "Manhattan Project" really mean? Besides uncomfortable thoughts of human-inflicted destruction, sheer scale is the first thing that comes to my mind. At its peak, during World War II, the US government employed 130,000 people in the Manhattan Project to develop the atomic bomb. The project's size together with several other features made it a classic case of what I would call "brute-force innovation": it was centrally-planned, closed, and science-driven. Even though the project included research teams across different universities, public research labs and companies across the United States, nothing was leaked in or out and each team had a very specific assigned task and plan. Through the Manhattan Project the government spearheaded the research, developed, testing and deployment of a revolutionary technology from start to finish over a span of four years. And there were no startups, spin-offs, royalty incentives, public-private-partnerships, venture capitalists, crowdsourcing, first-mover advantage, standard-setting or IPOs. Basically none of the buzzwords we associate with disruptive innovation in the 21st Century.
