After all the gloom, there’s a glimmer of hope on the horizon.
Front-loading the impact of its double-barreled motto, “Global Challenges, Global Solutions,” the Annual Meetings season may have finally gotten the grim “challenges” part over and done with. This week – starting at 9 a.m. on Tuesday, livestreaming via “World Bank Live” from the Bank’s Preston Auditorium – we’re about to explore one of the most promising solutions now inspiring the development community: the pro-growth, pro-jobs Competitive Industries and Innovation Program (CIIP).
The competitiveness conference will brighten the mood after last week’s barrage of bad news, which seemed relentless throughout the week as downbeat economic and geopolitical forecasts dominated the debate at the Annual Meetings of the World Bank Group and the International Monetary Fund. From Jim Kim’s exhortation that the world’s inadequate response to the ebola crisis must be strengthened, to Christine Lagarde’s stern warning of an “uneven and brittle” era of “prolonged subpar growth [with] excessive and rising inequality,” there was plenty of disheartening data. Lagarde offered a deflating new coinage: "the New Mediocre."
The sobering numbers within the IMF’s new World Economic Outlook underscored the sense that the global economy (and especially its wealthier countries) may indeed be stuck in an era of “secular stagnation.” So did the conclusion by Financial Times economic scholar Martin Wolf that the once-buoyant, now-humbled leaders of the global economy are in “an extraordinary state” of not just a gnawing malaise but a ‘managed depression’.”
As if all that weren’t dispiriting enough, the news late in the week that the world’s leading financial regulators were holding an unprecedented “stress test” of their crisis-response system – to analyze whether its newly strengthened safeguards can indeed protect against the risk of another cross-border crash of the financial system – made some skeptics wonder, “What do those guys know that we don’t know?”
Amid all the dreary news about the futile quest for elusive growth and the imbalanced rewards in a class-skewed society, one could be forgiven for feeling downcast. Yet Largarde’s rallying cry – “With the risk of mediocrity, we cannot afford complacency” – should remind optimists that we mustn’t let momentary doubts induce a drift toward the do-nothing paralysis of laissez-faire. An array of nuanced, pro-active strategies can help revive growth and jump-start job creation – and the World Bank Group conference this week will bring together some of the world’s leading economic-policy scholars to explore those strategies.
The “New Growth Strategies” conference – on Tuesday, October 14 and Wednesday, October 15 – will explain and expand upon the pro-growth thinking that undergirds the Competitive Industries approach. Targeting investment at the sector and industry levels to strengthen productivity and unlock new job creation, a wide range of analytical, investment and advisory projects are already under way – in both low-income and middle-income countries – through the Competitive Industries and Innovation Program (CIIP), which is convening the conference.
Competitive Industries is a market-attuned approach to targeting investment in those sectors and industries that show the greatest potential for creating sustainable jobs – while promoting a continuous public-private dialogue about how to hone those sectors' and industries’ competitive edge. The market-conscious analytical techniques of the Competitive Industries approach have excited policymakers and development practitioners who have long sought pragmatic, market-oriented strategies to inspire greater growth.
This approach, launched at the Bank Group in 2011, seems to have been gaining more and more adherents lately. Just last week, a research team at the Inter-American Development Bank issued a report outlining a conceptual framework that seems to promote many of the same priorities: The IDB’s focus on “productive development” aims to “systematically analyze country policies in key areas such as innovation, new firms, financing, human capital and internationalization” in the hope of helping countries “adopt the productive development policies necessary to prosper while avoiding the mistakes of the past.” That framework, which may inform the IDB’s future development efforts in the Western Hemisphere, certainly seems to be in harmony with the Competitive Industries projects now being implemented worldwide through CIIP.
In unveiling its new “productive development” concept, the IDB last week invoked an old-fashioned phrase that has long struck many Anglo-American ears as somewhat off-key: “Industrial policy,” the new IDB analysis declared, “has often done more harm than good.” It strikes me that that summation, using a term that is seldom used nowadays outside of academe, would probably win broad support among development practitioners (although opinion is divided among theorists).
The long-ago variants of “industrial policy,” as conceived half a century or more ago, are now seen by many practitioners as having relied on heavy-handed, dirigiste tactics. Such efforts often proved to be disappointing. The meaning of the term, I believe, has become less and less clear over the years (at least beyond textbook debates): In practical terms, using the phrase "industrial policy" adds little to our understanding of the modernized and market-sensitive strategies that are now being designed. Yet the very phrase provokes the wrath of laissez-faire fundamentalists who, clinging to the implacable clarity of absolutism, are ever-eager to disparage any type of intervention, however well-targeted it may be. Clearly, modern-day competitiveness initiatives are very different from earlier experiments: This is not your grandfather's concept of "industrial policy." Instead of allowing the debate to be diverted by such an abstraction, it seems wiser to focus on the pragmatic idea of “competitiveness strategies.” That phrase puts the emphasis where it belongs: on devising market-attuned efforts to help improve productivity and strengthen industries' and sectors’ competitiveness.
Coming after the sobering debates of Annual Meeting week, the livestreamed “New Growth Strategies” conference will remind the development community that there are promising and activist alternatives that go beyond mere laissez-faire fatalism. The urgency of achieving the World Bank Group’s twin goals – eliminating extreme poverty and promoting shared prosperity – summons us to assert the most energetic interventions we can devise, and to surmount the defeatism that pervades the laissez-faire temptation. By exploring pro-active and positive “New Growth Strategies,” this week’s competitiveness conference will rally the spirits of those who are determined to take the bold next steps to fulfill the ideal of “Global Challenges, Global Solutions.”