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December 2013

Year end round up: Possible development breakthroughs in 2014

LTD Editors's picture

Felix von Geyer writes in The Guardian about how Haiti hopes miracle moringa tree can help to combat malnutrition. The government is promoting the cultivation of a tree rich in vitamins, minerals and calcium to tackle food insecurity.

Small iron fish in soup to solve anemia in Cambodia.

Portable medical devices, including x rays, could revolutionize barefoot medicine in remote parts of the developing world.

GravityLight is an innovative device that generates light from gravity. It takes 3 seconds to lift the weight that powers GravityLight creating 25 minutes of light on its descent. It can be used over and over again with no running costs.

Walking on the Wild Side – Monetary Policy and Prudential Regulation

Otaviano Canuto's picture

Global financial integration and the linkages between the financial and the real sides of economies are sources of huge policy challenges. This is now beyond doubt, after what we saw in the run-up to and the unfolding of the 2008 global financial crisis. As a consequence, the established wisdom regarding monetary policies and prudential regulation has been subject to a deep critical review, including a demise of the belief that they should be maintained as fully independent functions.

Kaushik Basu on odds of ‘L-shaped’ recovery

Merrell Tuck-Primdahl's picture

Kaushik Basu has a new piece being carried by Project Syndicate that appeared in The Global Times, one of China's leading English language news sites. Titled 'Policy stasis raises odds of 'L-shaped' recovery', it cautions that the tenuous recovery in advanced countries, while buoyed by the latest US indicators, will only hold if economists and policymakers move away from ‘stasis’ positions that fail to promote entrepreneurship and innovation.

He warns that avoiding analytical creativity is dangerous and stresses that, at times, intuition and theory are needed to get out of economic ruts and to keep up with the pace of technological change in our globally integrated world.

Relative Deprivation, Discontent and Revolutions

Paolo Verme's picture

Social scientists have for long acknowledged that people evaluate their own wellbeing not only on the basis of what they have but also on the basis of what they have relatively to what other people have. Adam Smith (1776) wrote that "By necessaries I understand not only the commodities which are indispensably necessary for the support of life, but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without".1 And Marx (1847) wrote that "A house may be large or small; as long as the neighboring houses are likewise small, it satisfies all social requirement for a residence. But let there arise next to the little house a palace, and the little house shrinks to a hut”.2 

Despite the old age of these ideas, it is only during the second half of the twentieth century that scholars have tried to provide more analytical substance to the concept of relative deprivation. Duesemberry (1949)3 proposed a relative income hypothesis based on the idea that people determine their savings behavior not on their absolute incomes but on their relative position on the income scale. Runciman (1966)4 built an entire theory of social justice around the concept of relative deprivation defined as the sense of frustration that people experience when they observe other people having something they desire and within their reach but unattainable. While popular, these new theories struggled to become mainstream and it is only recently and thanks to studies on happiness that the concepts of relative deprivation have acquired new life.

Friday round-up: Taper readiness, Collier on migration, African industrialization, Good development reading

LTD Editors's picture

Buzz is growing about taper readiness, as economists and Fed watchers anticipated the market reaction to the likely end of US quantitative easing in 2014. In 'Are investors ready for the taper?' on the FT's 'The Short View,' Ralph Atkins cites from a joint paper by Poonam Gupta and Barry Eichengreen titled "Tapering Talk: The Impact of Expectations of Reduced Federal Reserve Security Purchases on Emerging Markets"

Who are the bottom 40%?

Jos Verbeek's picture

Who are the bottom 40 percent of society? Where do they live? What do they do? What other characteristics do they have?

These are just some of the questions we are hoping to answer as part of the World Bank Group’s new mission critical – to end extreme and chronic poverty by 2030 and boost shared prosperity. The renewed effort against poverty is needed as more than one billion people in the developing world continue to live in abject poverty (i.e. on less than $1.25 a day).

A guide to the top World Bank blogs and blogposts of 2013

Adam Wagstaff's picture

In both 2011 and 2012, I did a roundup of the most read 200 World Bank blogposts of the year, and compared the performance of the various World Bank blogs in terms of readership. What did blogging at the World Bank in 2013 look like?

Table 1 compares the Bank’s blogs in terms of how many of the 200 most-read posts they produced. As before, I excluded pages that didn’t look like posts – blog home pages, blogger profiles, thematic pages, and so on. I got the data on views from Omniture. This apparently gives more precise – and typically lower – page view figures than the Bank’s blogger platform whose counts are vulnerable to spammers. Readers who manage to read an entire blogpost without clicking on the URL of the post (e.g. through Feedly or the now defunct Google Reader) won't show up in my numbers are readers

The Promise of Financial Inclusion

Mahmoud Mohieldin's picture

The following post first appeared on the Huffington Post.

Half the world's adults, approximately 2.5 billion individuals, do not have an account with a formal financial institution. Lack of access to finance is disproportionately skewed towards the poor, women, youth, and rural residents. Defined as the proportion of individuals and firms that use financial services, financial inclusion is increasingly seen as critical for ending extreme poverty and supporting inclusive and sustainable development. It provides people with the tools to invest in themselves by saving for retirement, investing in education, capitalizing on business opportunities, and confronting shocks (Global Financial Development Report, 2014). According to the World Bank Group's newly launched Global Financial Development Report 2014 on Financial Inclusion, most of the unbanked cite barriers such as cost, lack of documentation, distance, lack of trust, or religious reasons.

A White Coin for a Black Day: Reflections on Presenting the WDR 2014 in Africa

Kyla Wethli's picture

Following the launch of the World Development Report (WDR) 2014, Risk and Opportunity: Managing Risk for Development, various team members have been traveling to different countries to present its findings. I recently joined other team members in a visit to Morocco, Egypt, Ethiopia, and South Africa, with a stop in the middle in London and Oxford.

One thing that struck me was how relevant the topic of risk management is for many countries. The importance of risk management seemed immediately apparent to many participants in our discussions. Indeed, many participants gave examples of risk management measures that have been practiced in their cultures for generations (such as storing grain in African villages), or linked messages in our Report to common sayings – for example, as Professor Awad from the American University in Cairo told us, our message on the importance of saving in good times for the bad times has a direct parallel in the old Arabic adage, “to keep a white coin for a black day”.

Tapering Talk: The Impact of Expectations of Reduced Federal Reserve Security Purchases on Emerging Markets

Poonam Gupta's picture

In May 2013, officials of the Federal Reserve System first began to talk of the possibility of the U.S. central bank tapering its securities purchases (of it gradually reducing them from the prevailing $85 billion monthly rate to something lower, presumably as a prelude to phasing them out entirely).  A milestone to which many observers point is May 22, 2013 when Chairman Bernanke raised the possibility of tapering in his testimony to the Congress.  This “tapering talk” had a sharp negative impact on economic and financial conditions in emerging markets.

Three aspects of that impact are noteworthy.  First, not only was the impact sharp but, in the view of many commentators, it was surprisingly large. The most alarmed (some would say alarmist) commentators raised the possibility that some emerging countries might be heading towards a full blown crisis like those in Mexico in 1994 and Asia in 1998.  Second, the impact was not felt uniformly; different countries were affected rather differently.  And, third, there were complaints from policy makers in the developing world about the Fed’s turn to tapering that were seemingly hard to square with earlier criticisms of quantitative easing by the U.S. central bank as a form of “currency war.”

Friday roundup: Inequality, Stiglitz, Chetty, frugal innovation, polio, and nudges

LTD Editors's picture

Inequality is trending as a news topic, in part due to new research by Branko Milanovic and colleagues and because Pope Francis as well as President Obama are treating it as a watershed issue. Read the piece by Howard Schneider in the Washington Post's Wonkblog for more.

Joe Stiglitz won the 2014 Daniel Patrick Moynihan Prize for his work on income inequality in the U.S. and its impact on public policy, adding to his many accolades. Read the Bloomberg coverage here.

Lost in Transition

Otaviano Canuto's picture

Financial markets and the news media have one thing in common: they tend to oscillate rapidly between hype and gloom. Nowhere is this more apparent than in analyses of emerging economies’ prospects. In the last few months, enthusiasm about these countries’ post-2008 economic resilience and growth potential has given way to bleak forecasts, with economists like Ricardo Hausmann declaring that “the emerging-market party” is coming to an end.
 
Many now believe that the recent broad-based growth slowdown in emerging economies is not cyclical, but a reflection of underlying structural flaws. That interpretation contradicts those (including me) who, not long ago, were anticipating a switchover in the engines of the global economy, with autonomous sources of growth in emerging and developing economies compensating for the drag of struggling advanced economies.

Hedging Food Price Risks in a World of Uncertainty

Julie Barbet-Gros's picture

 www.istockphoto.comThe sudden 2008 global food price crisis—which pushed 105 million people into poverty and sparked riots around the world—showed that designing risk management strategies at the national level may prove to be a sound investment. In fact, this is one of the key messages of the 2014 World Development Report on risks and opportunities. With excessive volatility in food prices expected to persist in coming years, net food-importing countries in the developing world need to develop appropriate solutions to address the food price risks and unexpected fiscal impacts ok they may face.

Are hedging instruments appropriate to address these risks?

Hedging food price risks essentially refers to the purchase of insurance against sharp food price fluctuations, transferring the risk to financial institutions or traders. The government of Malawi is a notable example of an importing country which successfully used hedging instruments to mitigate food security risks, resulting in significant import cost savings. In September 2005, Malawi purchased physical call options* for maize, which offered both price protection and the actual delivery of 60,000 metric tons of maize. These instruments thus allowed Malawi not only to effectively manage price risks, but also to deal with physical availability risks, which are critical in many food-importing countries.

How and why do countries vary so much in their use of health services?

Adam Wagstaff's picture

I’ve been struck recently by how little we (or at least I) seem to know about variations in use of health services across the world, and what drives them. Do people in, say, India or Mali use doctors “a lot” or “a little”. Even harder: do they “overuse” or “underuse” doctors? At least we could say whether doctor utilization rates in these countries are low or high compared to the rate for the developing world as a whole. But typically we don’t actually make such comparisons – we don’t have the numbers at our fingertips. Or at least I don’t.

I’m also struck by how strongly people feel about the factors that shape people’s use of services and what the consequences are. There are some who argue that the health problems in the developing world stem from people not getting care, and that people don’t get care because of shortages of doctors and infrastructure. There are others who argue that doctors are in fact quite plentiful – in principle; the problem is that in practice doctors are often absent from their clinic and people don’t get care at the right moment. There are others who argue that doctors are plentiful even in practice and people do get care; the problem is that the quality of the care is shockingly bad. Who’s right?

COP-19 and Forests – Why Big Progress on This Front, but Less on Others?

Jon Strand's picture

Last month’s global climate talks in Warsaw may be remembered mainly for progress on programs for Reduction of Emissions from Deforestation and Forest Degradation (REDD+), the UNFCCC mechanism for payments to reduce emissions from deforestation and forest degradation in low-income countries. Seven key decisions were agreed related to REDD+: on finance; reference levels; measuring, reporting and verification (MRV); safeguards; forest monitoring systems; institutional arrangements; and addressing drivers of deforestation. Additional funding of $280 million toward implementation of an extended REDD+ agenda was secured, coming mostly from Norway, but with contributions from the United Kingdom and the United States too.

Global forest losses in rainforest regions close to the Equator today represent close to 20% of net global greenhouse gas emissions, although the share has recently been falling slightly mainly due to less deforestation in Brazil. The target is now to reduce tropical countries’ forest losses to half by 2020, and eliminate such losses completely by 2030. It is encouraging that wider agreement seems to be forming on this issue.

Friday Round-up: Nelson Mandela, the power of Universal Health Coverage, the AIDS epidemic in 4 charts, gauging corruption, and grim climate trends

LTD Editors's picture

The week ended with the passing at age 95 of Nelson Mandela, father of South African democracy and a global icon for freedom. Read President Jacob Zuma's statement  as well as a statement from World Bank Group President Jim Yong Kim --

Universal health coverage was the topic of a December 6 speech by Jim Kim in Tokyo.

On the heels of World AIDS Day on December 1, Tariq Khokhar of the World Bank's Data Group provided a snapshot of the global state of AIDS in four charts.

Do our minds play tricks on us?

Karla Hoff's picture

The following post is the first in a series exploring 'mind and culture: pathways to economic development,' the theme of the World Bank's upcoming World Development Report 2015.

Try to guess the answer to the question:

How many seven -letter words of which the sixth letter is “N” (_ _ _ _ _ N _) would you expect to find in four pages of a novel in English (about 2,000 words)? 

Now guess the answer to another question:

How many seven-letter words of which the last three letters are “ING” (_ _ _ _ ING) would you expect to find in the same four pages? 

If you are responding as most people have, then your estimate is several times greater for ING words than for _N_ words.  This violates logic. With some reflection, it’s easy to see that every ____ING  word is also an _____N_ word.  The mistake is famous and so is its explanation.    _ING words are a standard category, _N_ words are not, and standard categories shape how we think.  We confuse what it is easy to think of with what is frequent. This bias, called the availability bias, is just one of a multitude of biases that appear to be universal.

Poverty reduction at the forefront of development

Punam Chuhan-Pole's picture

The Millennium Development Goals (MDGs) put the fight against poverty at the center of the international development agenda.  And progress has been noteworthy - so much so that it is now fueling more ambitious goals on poverty reduction. But this also brings new demands for better data to measure progress.

 UN Secretary General Ban Ki-moon recently called the MDGs “the most successful global anti-poverty push in history.” With their mutually reinforcing linkages, they committed the world to reducing extreme poverty to historically low levels, while also improving education, health, nutrition, and other development prospects for hundreds of millions of the world’s poorest people. There is no doubt that since their announcement in 2000, the MDGs have raised the profile of poverty reduction in national development strategies, aid discussions and allocation, and the international development discourse. Systematic cross-country monitoring of simple to understand targets proved to be an effective tool in raising this profile.

What exactly is the public-private mix in health care?

Adam Wagstaff's picture

I’ve been in quite a few meetings recently and read quite a lot of documents where people have made claims about the relative sizes of the public and private sectors in health care delivery. A recent report from the World Bank Group on the private sector in Africa claims that “the private health sector now provides half of all health services in the region.” A document I reviewed recently claimed that “much” of medical care is provided by the private sector – an assertion I hear quite often.

As far as I can make out, the data underlying such claims reflect a very partial picture. The Africa data are from the Demographic Health Survey which captures only treatment for (outpatient) maternal and child health services (MCH); it also covers only the developing world, and only the poorer part of it. Some claims reflect data for just one country. I’ve heard a lot about India, but these data (obviously) cover just India, and only outpatient visits.