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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.

Technology, sound record keeping and access to finance could be the keys to youth unemployment in Kenya

Mercy Okoth's picture



Youth in Kenya are experiencing much higher unemployment rates than the rest of the Kenyan population. In 2014, Munga and Onsomu, reported that youths aged 15-19 and 20-24 years had unemployment rates of 25% and 24%, respectively about double the overall unemployment of 12.7% for the entire working-age group. Despite this, the Kenya youth are slowly transitioning from the risk averse mentality; that is, one has to be employed and depend on a monthly income in order to earn a living.

Quote of the week: Kenneth Branagh

Sina Odugbemi's picture

Kenneth Branagh“I am very happy to go missing. I take myself out of the electronic loop as often as I can. I am not a fast responder. I do search for the silence.”
 

-Kenneth Branagh, a director, producer, and screenwriter from Belfast, Northern Ireland. At 29, he directed and starred in the film Henry V (1989), which brought him Best Actor and Best Director Oscar nominations.  In April 2015, he announced he would form the Kenneth Branagh Theatre Company, with which he will present a season of five shows (The Winter's Tale, Harlequinade/All On Her Own, The Painkiller, Romeo and Juliet and The Entertainer) at London's Garrick Theatre from October 2015 - November 2016.

Geek Heresy, by Kentaro Toyama: a book review

Duncan Green's picture

Gawain KripkeGuest post by Gawain Kripke, Oxfam America’s Director of Policy, on Kentaro Toyama's book Geek Heresy.

Geek Heresy book coverI love my smart phone. It’s awesome and it makes me more awesome. I honestly think that my life is much better with it than without. It makes me a better worker – able to review documents, communicate with colleagues, keep projects moving smoothly even when I’m out of the office.   It makes me a better citizen – I”m able to read news and events, can report emergencies and contribute to public safety and knowledge by feeding in through networks.  I think I’m a better parent – or at least it makes parenting easier.  All the logistics of picking up kids and changing schedules are greatly assisted by having my mobile phone.  It’s not cool to say so, but I think my mobile phone is a fundamentally empowering technology that helps make me a better person and helps me live a better life.

So, why shouldn’t mobile phones do the same for other people, including poor ones?  In researching this idea, I came across Kentaro Toyama.  I called him up, and in a long conversation, he batted down my fumbling ideas effortlessly and gracefully.  I didn’t know it at the time, but Toyama has emerged as a leading skeptic of technology-led concepts of development.  He’s now published Geek Heresy, a book that is worth reading, both for proponents and skeptics of technology in development.

Have technology and globalization kicked away the ladder of ‘easy’ development? Dani Rodrik thinks so

Duncan Green's picture

Dani RodrikEconomic transformation is necessary for growth that can lead to poverty reduction. However, economic transformation in low-income countries is changing as recent evidence suggests countries are running out of industrialization options much sooner than once expected. Is this a cause for concern? What does the past, present, and likely future of structural transformation look like? Read on to find out why leading economist Dani Rodrik is pessimistic and what some possible rays of light are. 

Dani Rodrik was in town his week, and I attended a brilliant presentation at ODI. Very exciting. He’s been one of my heroes ever since I joined the aid and development crowd in the late 90s, when he was one of the few high profile economists to be arguing against the liberalizing market-good/state-bad tide on trade, investment and just about everything else. Dani doggedly and brilliantly made the case for the role of the state in intelligent industrial policy. But now he’s feeling pessimistic about the future (one discussant described it as ‘like your local priest losing his faith’).

The gloom arises from his analysis of the causes and consequences of premature industrialization. I blogged about his paper on this a few months ago, but here are some additional thoughts that emerged in the discussion. He’s also happy for you to nick his powerpoint.

Dani identified two fundamental engines of growth. The first is a ‘neoclassical engine’, consisting of a slow accumulation of human capital (eg skills), institutions and other ‘fundamental capabilities’. The second, which he ascribed to Arthur Lewis, is driven by structural differences within national economies – islands of modern, high productivity industry in a sea of traditional low productivity. Countries go through a ‘structural transformation’ when an increasing amount of the economy moves from the traditional to the modern sector, with a resulting leap in productivity leading to the kinds of stellar growth that has characterized take-off countries over the last 60 years.

Simulated Manufacturing Employment SharesManufacturing has been key to that second driver. It is technologically dynamic, with technologies spreading rapidly across the world, allowing poor countries to hitch a ride on stuff invented elsewhere. It has absorbed lots of unskilled labour (unlike mining, for example). And since manufactures are tradable, countries can specialize and produce loads of a particular kind of goods, without flooding the domestic market and driving down prices.

But that very dynamism has produced diminishing returns in terms of growth and (especially) jobs. Countries are hitting a peak of manufacturing jobs earlier and earlier in their development process (see graph). And it could get much worse – just imagine the impact if/when garments, the classic job-creating first rung on the industrialization ladder, shift to automated production in the same way as vehicle production.
 

Harnessing ICT tools for community disaster preparedness and recovery

Keiko Saito's picture
Viewing Yuriage before the tsunami using augmented reality glasses. Code for Resilience


On a visit this week to the Japanese coastal area of Yuriage, Teerayut Horanont peered through glasses at the quiet landscape that gives way to the Pacific Ocean. He didn’t just see the landscape – he saw the town that once thrived there.
 
An augmented reality tool installed in the glasses provided a visual overlay of what the area looked like before the 2011 Great East Japan Earthquake and Tsunami that devastated Yuriage and many other coastal communities in Japan.

Challenging innovators to find new ways to make disaster risk information accessible to all

Alanna Simpson's picture
Mapping damage after Typhoon Haiyan (Yolanda) in the Philippines. GFDRR


Sometimes the impacts of disasters seem difficult to predict, such as when the heavy snow that set off deadly avalanches in Afghanistan this winter also damaged transmission lines, disrupting the flow of electricity imported from Uzbekistan and Tajikistan and resulting in power outages in Kabul. Other times the consequences seem almost inevitable, for example the likelihood of a devastating earthquake in the Ganges Basin of India, Nepal and Bangladesh within our lifetime.

There are, however, tools and models that allow us to determine the potential impacts of a disaster before they happen, and provide decision-makers with information they can use to reduce the potential impact.

Here is a model Indian States can implement to ensure smooth flow of medical supplies to health facilities

Shanker Lal's picture
Photo: John Isaac / World Bank

Though the Indian government has steadily increased funding for its health sector, per capita allocation is still low; reform is thus critical to effectively utilize the available budget.

​The underlying question is: Given a set of resources, how do you procure goods in a way that achieves value for money and maximum efficiency?

In India, procurement of health sector goods has been a major concern for the government. Drugs and medical supplies are not procured and distributed in time, and this interruption in the delivery of services in health facilities affect the general population’s health outcomes.

Media (R)evolutions: Emerging Markets to Lead Sales of Technology Devices in 2015

Roxanne Bauer's picture
New developments and curiosities from a changing global media landscape: People, Spaces, Deliberation brings trends and events to your attention that illustrate that tomorrow's media environment will look very different from today's, and will have little resemblance to yesterday's.

2015 forecasts for sales of technology devices indicate global stability as the market remains at around one trillion USD, where it has hovered for the last three years. However, the forecasts also predict shifts at the country level as the top ten largest growth markets will increase by over $10 billion. Emerging markets, in which both volume and pricing contribute to positive sales, will dominate this growth. 

India will experience the highest growth rate, primarily driven by smartphones sales, followed by China. China's technology device market represents an interesting case study because it is predicted to grow by just $1.8 billion in 2015-- a mere 1% increase over the estimated 2014 total-- but that is still large enough for second place. 
 
Emerging Markets to Lead Tech Sector Growth in 2015
Infographic: Emerging Markets to Lead Tech Sector Growth in 2015 | Statista
You will find more statistics at Statista

Women and girls are the answer to innovation in Africa

Maleele Choongo's picture
4 Will You Take On... Take On Extreme Poverty 2:11 / 2:11 Poverty and Hardship in the PacificWorld Bank1:02:02 Rwanda: A Model for Building Strong Safety NetsWorld Bank4:32 My New Life: Primary Education for All in IndiaWorld Bank4:39 Applis mobiles pour
Women in Senegal traditionally have few chances to acquire computer or programming skills. A young woman from Dakar has set out to change that. Binta Coudy De has created a tech hub, Jjiguene Tech Hub, that trains young women in computer and programming skills, preparing them for a career in the high-tech sector.

According the World Bank’s latest report on the state of Science, Technology, Engineering, and Mathematics (STEM) research in Africa, African researchers produce only 1 percent of the world’s research.

As shown in this video, unlocking the talent of women and girls could improve the quality and quantity of scientific research and tech innovation in Africa.

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