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March 2016

Stalled productivity, stagnant economy: Chronic stress amid impaired growth

Christopher Colford's picture

Call it “secular stagnation,” or the disappointing “New Mediocre,” or the baffling “New Normal” – or even the back-from-the-brink “contained depression.” Whatever label you put on today’s chronic economic doldrums, it’s clear that a slow-growth stall is afflicting many nation’s economies – and, seven years into a lackluster recovery from the global financial crisis, some fragile economies seem to be lapsing into another slump.

As policymakers struggle to find a plausible prescription for jump-starting growth, a tug-of-war is under way between techno-utopians and techno-dystopians. It’s a struggle between optimists who foresee a world of abundance thanks to innovations like robot-driven industries, and pessimists who anticipate a cash-deprived world where displaced ex-workers have few or no means of earning an income.

To add a bracing dose of academic rigor to the tech-focused tug-of-war, along comes a data-focused realist who adds a welcome if sobering historical perspective to the debate. Robert J. Gordon, a macroeconomist and economic historian at Northwestern University, takes a longue durée perspective of technology’s impact on growth, wealth and incomes.

Gordon’s blunt-spoken viewpoint has caused a sensation since his newest book, “The Rise and Fall of American Growth,” was launched at this winter’s meetings of the American Economic Association. His analysis injects a new urgency into policymakers’ debates about how (or even whether) today’s growth rate can be strengthened.

When Gordon speaks at the World Bank on Thursday, March 31 – at 11 a.m. in J B1-080, as part of the Macrofiscal Seminar Series – economy-watchers can look forward to hearing some ideas that challenge the orthodoxies of recent macroeconomic thinking. His topic – “Secular Stagnation on the Supply Side: Slow Growth in U. S. Productivity and Potential Output” – seems likely to spark some new thinking among techno-utopians and techo-dystopians alike.

To watch Gordon’s speech live via Webex – at 11 a.m. on Thursday, March 31 – click here. To dial in to listen to the audio, dial (in the United States and Canada) 1-650-479-3207, using the passcode 735 669 472. For those telephoning from outside the United States and Canada, the appropriate numbers can be found on this page.

Helping Mongolians become savvier in managing their personal finances

Siegfried Zottel's picture
 

Did you know that low-income Mongolians are better at managing daily finances than higher income earners, although those with better incomes are more likely to make provisions for the future?

These were the findings of a comprehensive demand-side assessment on financial capability in Mongolia which the World Bank Group carried out in 2013.

These findings make sense.  Poor people – those with low and irregular incomes – devote a lot of time to thinking about how to stretch their money to put food on the table while being able to cover other daily spending needs.  They tend to have surprisingly sophisticated financial lives despite having limited income, the Portfolios of the Poor found.

Determined to deliver: Private-sector ingenuity boosts public-sector results, through executive 'delivery units'

Christopher Colford's picture

Innovation is the Holy Grail of governance practitioners worldwide – but, when it comes to public-sector management, is there truly a “science of delivery”? Politics is “the art of the possible,” and governing often seems to be more a skilled craft than a predictable science – requiring an ad hoc alchemy of persuasion, pressure, guile and gumption.

Yet beyond its operational finesse or its scientific rigor, strong governance also requires something more practical – and perhaps more painstaking: diligent management. Improving government agencies’ performance is a key priority for policymakers, and private-sector-style thinking – especially about delivering cost-effective results, on time and on budget – can make a constructive contribution to public-sector management.

Public-sector leaders must always design finely tailored solutions that suit ever-shifting political moods, but they can also adapt the most deft techniques – many of them tested in the private sector – that emphasize achieving tangible results. With a blend of the private sector's can-do drive and the public sector's focus on accountability, an imaginative crosscurrent of ideas enlivened a recent “deep dive” conference at the World Bank that explored a relatively new management mechanism: the results-focused executive “delivery unit.”

The World Bank Group’s Governance Global Practice (GGP) teamed up with a global nonprofit foundation, the Centre for Public Impact (CPI), to convene an expert group exploring this recent innovation in public-sector management. The gathering – “The Future of Delivery Units: Accomplishments, Challenges and New Directions for Reforms at the Center of Government” – was co-sponsored by the President’s Delivery Unit within the Bank Group.

The forum heard various perspectives from governance practitioners, political theorists and academic scholars, along with both practicing and former civil servants. Much of the conference-goers’ thinking also seemed to have been influenced by private-sector logic. The conference’s pragmatism was reassuring amid this year’s primal-scream spectacle, in all too many countries, of political dysfunction. For many good-government idealists, it’s been alarming to see the tumult in many once-stable, now-volatile developed economies where an advanced capacity for governing had seemed well-established.



Bob Beschel, the Global Lead of the Center of Government Global Solutions Group – part of the World Bank's Governance Global Practice – convenes the conference's opening session. Photo by Lana Wong.

The use of delivery units should be evaluated “in the context of management innovation,” as the conference chairmen – Bob Beschel, the Global Lead of the GGP’s Center of Government Global Solutions Group, and Adrian Brown, the Executive Director of CPI – told the participants. Indeed, such consulting firms as the Boston Consulting Group (which funds CPI) and McKinsey & Company have long aimed to bring private-sector-minded efficiencies to public-sector institutions. Having labored in those vineyards awhile, some years ago, I came to see how creatively cross-pollinating ideas can transfer knowledge about best practices among the public, private, social and academic sectors.

Small states in search of big solutions: How the Caribbean Growth Forum is accelerating pro-growth reforms

Steve Utterwulghe's picture



Grenada – Photo by Steve Utterwulghe

Many Caribbean States have long been trapped in a vicious cycle of low growth, high debt and limited fiscal space. The impact of the 2008 financial crisis, as well as recurrent natural disasters, has made the situation even more acute in the region.

To address the structural and policy obstacles to development and growth, a multi-stakeholder dialogue platform on growth in the Caribbean was launched in 2012 by policymakers, the private sector and civil society from 12 states in the region. The Caribbean Growth Forum (CGF) was championed by the states’ prime ministers, and focal points were appointed in the respective Ministries of Finance. The World Bank, acting as the CGF Secretariat, has been behind this initiative from the onset, in collaboration with other regional development banks and various development partners active in the region.
 
Using a conceptual framework of reform identification, tracking and reporting, CFG’s stakeholders have made 495 reform recommendations so far – 40 percent of them actionable in the three pre-identified thematic areas: investment climate, connectivity and logistics, and productivity and skills. The World Bank in 2015 undertook a stocktaking exercise, which identified the CGF’s positive impacts and the areas of improvement.

The benefits of the CGF are unanimously recognized: the generation and dissemination of knowledge to support the reform implementation in the three thematic areas; support for the prioritization of government reforms; the strengthening of stakeholders’ accountability; the creation of social capital by giving a voice to a range of stakeholders; peer-to-peer exchanges and pressure; and the fostering of a culture of dialogue in the policy reform agenda.

Along with Cecile Fruman, Director of the Trade and Competitiveness Global Practice of the World Bank Group, I was honored to participate and speak at the launch of the Second Phase of the CGF in Belize on March 1 and 2. The objective of the event was twofold: to share and discuss the lessons learned so far, and to have the finance ministers of 12 Caribbean countries endorse a Joint Communiqué.

That communiqué, according to Sophie Sirtaine, the World Bank’s Country Director for the Caribbean, “signals the renewed commitments of these Caribbean nations to accelerate growth enhancing reform implementation, while strengthening public accountability through strengthened public-private dialogue (PPD) mechanisms.”

Competitive Cities: Kigali, Rwanda – governance, growth and gorillas

Z. Joe Kulenovic's picture



Natural attractions, clean streets and modern high-rise buildings: Kigali, Rwanda. 

In mid-2014, the World Bank’s Competitive Cities team visited Kigali, Rwanda, the only national capital among our six case studies of economically successful cities around the world, representing the Sub-Saharan Africa Region. Kigali and Rwanda as a whole have enjoyed some of the continent’s fastest growth rates, in terms of both jobs and incomes, albeit from a comparatively low starting point. We aimed to understand the factors and specific interventions underpinning this success and to extract some lessons for other cities.
 
Rwandan society has made a remarkable recovery since the genocide and economic dislocation of the 1990s, when the country lost a significant share of its population and productive capacity. The process of rebuilding its infrastructure and institutions, and of creating an enabling environment for private-sector growth, has been a painstaking one.

Unlike some other countries in its region, Rwanda is a relatively small market, is landlocked and is without developed transportation infrastructure or significant natural-resource endowments. Key selling points to attract international investors have therefore included Rwanda’s recent stability, quality of life, improving human capital and natural beauty. In particular, its tropical mountain scenery, lakes and volcanoes, its biodiversity, and its gorillas in the wild have been major draws for leisure visitors, while improving convention and meetings facilities has been aimed at turning Kigali into a regional hub for business travelers.
 
Rwanda’s National Plans include strategies for the development of targeted sectors (such as tourism, ICT, financial and professional services, mining and agriculture). In the mid-2000s, the implementation of a national Land Tenure Regularization Program dramatically improved Rwanda’s land-registration process, enabling the functioning of land markets based on private ownership – and, by extension, Rwanda’s subsequent real-estate and construction boom, providing a strong boost to GDP growth and job creation.

Economic opportunity for women: It's good business

Anabel Gonzalez's picture

Achieving gender equality and the economic empowerment of women is both a moral and social imperative — and it's also good business.
 
A study conducted by the McKinsey Global Institute estimates that, if all countries matched the level of progress toward gender equality of the most advanced country in their region, annual global GDP could increase by up to $12 trillion in 2025.
 
Over the past two decades, significant progress has been made toward raising living standards and closing the gap between men and women, particularly in health and education. Life expectancy at birth has risen in tandem with reductions in maternal mortality, while differences in access to primary education between boys and girls are diminishing steadily.
 
These gains — although significant — conceal differences between countries and regions, and are insufficient to ensure equal access to economic opportunities for boys and girls.


 

Financial inclusion of women in five charts

Nina Vucenik's picture

Languages: EspañolFrançais,  عربي


One billion women – more than 40% of the women around the world – don’t have access to formal financial services, according to Global Findex.

The gender finance gap remains at 9% in developing countries, although in some parts of the world it is much higher, according to the 2014 Global Findex data.

Women are 20% less likely than men to have a bank account and 17% less likely to have borrowed money formally.

How financially included are women in the world?


Focusing on Universal Financial Access by 2020 in 25 Countries

To reach financial inclusion, the World Bank Group and partners are focusing on 25 countries where 73% of all financially excluded people live, under the Universal Financial Access by 2020 initiative.

The UFA2020 goal is to enable access for all adults, women and men alike, to a transaction account through which they can access other financial services -- such as savings, credit or insurance -- that can help improve the quality of their lives.



The following 4 charts explain how financially included women are in those 25 countries, according to Findex data.

Celebrating women entrepreneurs on International Women's Day

Cecile Fruman's picture
WomenX – Taking It To Scale – Women At The Helm


It takes a special type of woman to be an entrepreneur.

I didn’t quite know what to expect when, earlier this year, I met with a group of women entrepreneurs in Karachi who are participating in the World Bank Group’s womenX program. I had read a lot about the low numbers of women running businesses in Pakistan, the challenging environment they operate in, and their many constraints. But I was struck by the positivity and drive of the women I met. They shared with me how they are improving their business and financial practices, building their confidence, and expanding their networks.

Take for instance, Mussarat Ishaq, who runs Al-Karam Packages. Mussarat was a Karachi-based housewife, pregnant with her third child, when her husband divorced her. With no work experience, little education, no money and no plan, she learned the ropes of polythene production and with a business partner, started out small – purchasing the raw material from local markets, using outdated machinery to produce plastic bags, and supplying them to small businesses in their area. Today, they have purchased more sophisticated equipment and they employ 250 employees, working to provide low-cost, high-quality, reusable and environment-friendly packaging materials to Pakistani clients.