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For success and for sustainability, promote social ‘well-being’; Good governance ensures a ‘virtuous cycle’ of growth

Christopher Colford's picture

Beyond the cold calculus of GDP and TFP and FDI, development is about promoting strong societies as well as about propelling powerful economies. But how can we measure societies’ progress toward success? Some may try to calculate “Gross National Happiness” as a yardstick, and some may envision “getting to Denmark” as the ideal end-of-history destiny of development – but are there patterns that can help define the priorities that help societies flourish?

Two recent Washington seminars suggest that – by pursuing innovation and inclusion, and by focusing on statistical indicators of “well-being” – policymakers can define realistic paths toward development success.

The methodologies used by Harvard economist Philippe Aghion at an International Monetary Fund forum and by former World Bank strategist Enrique Rueda-Sabater at a Center for Global Development discussion may have been different, but their conclusions were in harmony: Societies thrive when social inclusion and technological innovation help expand the circle of opportunity, and when strong governance standards lead to sound civic decision-making.

Taken together, the two seminars’ insights should help inform policymakers’ debate about the Sustainable Development Goals, which are due to be approved in September at the opening of the United Nations General Assembly.

Aghion, at an IMF seminar (sponsored by its Low-Income Countries Strategy Unit) on June 30, approached the topic of “Making Growth Inclusive” by imagining “how to enhance productivity growth while promoting social mobility.” Presenting data from a recent paper on “Innovation and Top-Income Inequality,” which he recently co-authored with an all-star team of economists, Aghion outlined the way that income and wealth inequality have drastically soared in developed countries since the mid-1970s – analyzing trends that by now are sadly familiar to the squeezed middle class, as calculated in the esteemed work of Thomas Piketty, “Capital in the Twenty-First Century.”

Building on that data, Aghion took the inequality-and-inclusion logic several steps further. He lamented the way that “skill-biased technological change” has (in the absence of policy safeguards) provoked societies to stratify along the lines of wealth, income, education and political connections. Yet “creative destruction” is inevitable in “a Schumpeterian world,” reasoned Aghion: A significant factor that's widening the wealth gap is the very same process of continuous economic renewal that helps economies advance. “There is a big [economic] premium to being a superstar innovator,” he asserted, noting that “you can become rich by innovating” – and thus “innovation is a big part of top-1-percent income inequality.”



Philippe Aghion

“Creative destruction is good for social mobility” and broader inclusion, in the long run, because it causes a steady procession of “new innovators to replace old incumbents.” The effect of each wave of innovation is fleeting, especially in a hyperspeed economy: “You get temporary ‘rents’ when you innovate. You don’t get them forever,” because the relentless Schumpeterian process will eventually cause yesterday’s innovators to become, in turn, tomorrow’s has-beens.

What developing countries can learn from Alaska

Ted Chu's picture
The White Pass & Yukon summit train. © Ted Chu


I recently returned from vacation in Alaska, America’s final frontier. This place is massive, twice as big as Texas. It’s so remote that many of the conveniences Americans take for granted simply aren’t available. Prices are high, cell-phone coverage is sparse, and the state capital, Juneau, isn’t even accessible by road. It’s wonderful in summer, but during winter there are only six hours of dim sun.

For the 737,000 people who call Alaska home, life can be a challenge most of the year. The economy relies heavily on energy extraction (80% of state revenue is from petroleum) and the federal government (subsidies and military spending), plus fishing and tourism.

PPP-powered access to water — and much more

Melvin Tan's picture
Note: This blog entry was adapted from an original submission for the PPIAF Short Story Contest. It is part of a series highlighting the role of Public-Private Partnerships (PPPs) in projects and other transformative work around the world.

One of the most salient features of a public-private partnership (PPP) arrangement is the flexibility to use out-of-the-box solutions in resolving the many challenges in day-to-day operations. As a result, the PPP setup gives operators the liberty to come up with innovative solutions for more effective and efficient delivery of the most basic services.
 
Location of Laguna Province in the
Philippines. Image: Wikimedia Commons

In the Philippines, Laguna Water — a joint venture company formed as a result of a PPP between the Provincial Government and Manila Water Philippine Ventures formerly known AAA Water Corporation — is benefitting immensely from that flexibility since it took over the operations of the province-run water system in 2009. Although primarily tasked to improve the provision of water and wastewater in the three cities of Biñan, Sta. Rosa and Cabuyao — collectively known as concession area — Laguna Water’s sustainable business model allows it to participate on matters related to community development (including job generation), as well as programs centered on health, safety and environmental protection.
 
As a staunch advocate of sustainability, Laguna Water takes pride in having significantly improved access to piped, clean and affordable water to 62 percent of the population of the concession area— a far cry from the 14 percent when it started its operations in 2009. The joint venture’s PPP framework has been instrumental in putting in place water infrastructure that provides easier access and better services to customers. Today, Laguna Water is the biggest water service provider in the entire province, and is also ahead in its service-level targets on coverage, water quality and water loss reduction. 
 
Here are some details about our PPP-empowered approach.

Weekly wire: The global forum

Roxanne Bauer's picture
World of NewsThese are some of the views and reports relevant to our readers that caught our attention this week.
 

State of Civil Society Report
CIVICUS alliance
The scale of the threats to civic space should not be underestimated. CIVICUS’ analysis suggests that, in 2014, there were serious threats to civic freedoms in at least 96 countries around the world. If you take these countries’ populations into account, this means that 67 years after the Universal Declaration of Human Rights guaranteed our freedoms of expression, peaceful assembly and association, 6 out of 7 humans live in countries where these freedoms were under threat. And even the most mature democracies are not exempt

6 Astounding Ways Africa Is Paving the Way for the Future of Technology
Open Mic
Every week, the American tech sector uses the most advanced mobile technologies in the world to create some new meaningless distraction. Tinder for dogs, Airbnb for boats, Yo — all sorts of luxury convenience tools created to manufacture and solve problems that don't exist and extract some in-app purchases along the way. Meanwhile, in Africa, a budding generation of technologists, coders and entrepreneurs are rising to solve their continent's most pressing problems. Entire new industries around payment solutions, crowdsourcing and entertainment media are springing up in tech hubs in Kenya, Nigeria and other countries.  This is the rise of Silicon Savannah — and a few ways it's going to change the global face of technology.

Going, going, gone – timeline of an innovative auction that aims to reduce methane emissions

Scott Cantor's picture
Pilot Auction Facility for Methane and Climate Change Mitigation (PAF)








Private investors bought price guarantees for 8.7 million tons of methane emission reduction in an innovative auction, attracting bidders from across the globe.
 
The Pilot Auction Facility for Methane and Climate Change Mitigation (PAF) provides support to businesses that invest in climate friendly projects.  The first pilot auction was held online on July 15, 2015, auctioning off price guarantees, or put options, targeting methane reducing projects. 
 
By providing a floor price for captured methane, the PAF offers private investors a financial incentive to fund carbon capture. Using an auction maximizes the impact of public funds dedicated to slowing climate change.
 
Here’s my journal entry from the day – July 15 – auction day (at last!)

The case for inclusive green growth

Sri Mulyani Indrawati's picture
Women fishers in Ghana. (Andrea Borgarello/World Bank - TerrAfrica)



Over the last 20 years, economic growth has helped to lift almost a billion people out of extreme poverty. But 1 billion people are still extremely poor. 1.1 billion live without electricity and 2.5 billion people without access to sanitation. For them, growth has not been inclusive enough.

In addition, growth has come at the expense of the environment. While environmental degradation affects everyone, the poor are more vulnerable to violent weather, floods, and a changing climate.

Development experts, policymakers, and institutions like the World Bank have learned a major lesson: If we want to succeed in ending poverty, growth needs to be inclusive and sustainable.

Crowding in Technical and Financial Resources in Support of Forest Landscapes

Paula Caballero's picture
Mexico butterflies by Curt Carnemark / World Bank ​As financing for development talks wrapped up last week in Addis, many conversations revolved around the “how much” as well as on the “how” of achieving universal sustainable and inclusive development in the post 2015 context. Work in the natural resources arena has valuable lessons to offer. 

There is a growing consensus that a new approach is needed to meet the financial needs of developing countries to ensure sustainable, inclusive and resilient growth paths. We all know that Official Development Assistance (ODA) finance is limited and cannot address the massive investment needs of countries. In addition to increased domestic resource mobilization, the more effective engagement of a variety of players, especially from private sector, NGOs, and philanthropic organizations, will be key to close the finance gap. 

A slogan for sustainable agriculture: 'Mot Phai, Nam Giam' rice production

Chris Jackson's picture
A woman measures greenhouse gas emissions on a rice farm in Vietnam.
A woman measures greenhouse gas emissions on a rice farm in Vietnam.


Successful slogans can make a world of difference. In Vietnam, a catchphrase for a climate-smart way to produce rice has shown small farmers how they can boost rice profitability, while also reducing greenhouse gas emissions.

The World Bank discovered this through an Agriculture Competitiveness Project in Vietnam, which championed an alternate wetting and drying rice production technique that uses less water, reduction in application of fertilizers and management of crop residues to reduce the level of methane and nitrous oxide emissions from the rice fields. Adopting this climate-smart practice required the systematic engagement of the entire community committed to draining the rice fields multiple times over a matter of weeks, something traditionally rarely done. Adopting this alternate wetting and drying technique not only helps strengthen plant roots but also reduces flooding periods which translates into reduced methane production.

Lighting up the future in Bangladesh

Yann Doignon's picture

Children using a computer powered by solar energy

Night falls in Dhaka. Commercial streets glow with lights and the neon-lit stores and restaurants are abuzz with shoppers enjoying a break from Ramadan. This is a great visual spectacle punctuated by the incessant honking of colorful rickshaws.

But the reality is different right outside the capital. Sunset brings life to a halt in rural areas as about 60 percent of rural households do not have access to grid electricity. Kerosene lamps and battery-powered torches are widespread yet limited alternatives, their dim light offering limited options for cooking, reading or doing homework.  

It is a sweltering hot day when our team sets out to visit a household of 14 in the village of Pachua, a two-hour drive from Dhaka. Around 80% of the villagers have benefited from the solar panel systems to access electricity. The Rural Electrification and Renewable Energy Development Project (RERED), supports installation of solar home systems and aims to increase access to clean energy in rural Bangladesh.
 
We’re accompanied by Nazmul Haque Faisal from IDCOL, a government-owned financing institution, which implements the program. “This is the fastest-growing solar home system in the world,” Faisal says enthusiastically, “and with 40,000-50,000 new installations per month, the project is in high demand.”

We’ve now reached our destination and Monjil Mian welcomes us to his house, which he shares with 13 other members of his family, including his brothers, two of them currently away for extended work stints in Saudi Arabia.

Where will the footprints be when there is no more sand? Coastal erosion and the future of Senegal

Matthias Cinyabuguma's picture

Where will the footprints be when there is no more sand?  Coastal erosion and the future of Senegal

Rocky shores that hardly measure more than several meters at high tide are all that are left of some of Senegal’s most highly prized beaches at the seaside resort Saly. With every year that passes, the Atlantic ocean inches closer, much to the dismay of locals and tourists alike.
25% of the Senegalese coast is at high risk for coastal erosion, and it is estimated that this figure will increase to 75% by 2080 if sea levels continue to rise. A victim of climate change, Senegal tourism has taken a hit despite being one of the key focus areas of the Plan Sénégal Émergent, the country’s long-term growth and development strategy.


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