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Unpacking the drivers of inequality

Augusto Lopez-Claros's picture
The relationship between growth and income inequality is more complex than the one between growth and poverty, and has been the subject of considerable study.
 
An early contribution in the 1950s by Nobel Prize-winning economist Simon Kuznets, for instance, noted that at least two forces tended to increase inequality over time. One was the concentration of savings in the upper-income groups; he observed that in the United States the wealthiest 5 percent of the population accounted for close to two-thirds of total savings.
 

When do firms call it quits?

David Francis's picture
The entry and exit of firms in the private sector, so-called “firm turnover,” can be an indication of a healthy market, if that means scarce resources are re-allocated from less to more productive firms.  Such churning can be substantial in dynamic economies; in the U.S, for instance, according to recent work by the Brookings Institution, “… one new business is born about every minute, while another one fails every eighty seconds.”[1] Underneath this churning is substantial re-allocation of resources across firms and se

How the global economy determines fertility and families

Quy-Toan Do's picture

Attempts to understand population growth and the determinants of fertility date as far back as the late 1700s, when Thomas Malthus wrote ‘An Essay on the Principle of Population.’

Postulating that fertility decisions are influenced by women’s opportunity cost of time (Becker, 1960), choice over fertility has been incorporated in more recent times into growth models in order to understand the joint behavior of population and economic development throughout history. The large majority of existing analyses examine individual countries in a closed-economy setting. However, in an era of ever-increasing integration of world markets, the role of globalization in determining fertility can no longer be ignored.

Friday round up: World Development Report 2015, the data revolution, China’s reform prospects, and the World Happiness Report

LTD Editors's picture
Varun Gauri speaks with Owen Barder about the World Development Report 2015: Mind, Society, and Behavior on the Development Drums podcast.
 
In Project Syndicate, Jeffrey Sachs writes that 'the data revolution can drive a sustainable development revolution, and accelerate progress toward ending poverty, promoting social inclusion, and protecting the environment.'
 

Three years ago, 2.5b adults were unbanked, compared to 2b today

LTD Editors's picture
The Global Findex, launched last month, is a massive database that tracks account ownership and use, savings, borrowing, and payments around the world.  Jake Kendall, Deputy Director of Research and Innovation on the Financial Services for the Poor team at the Bill & Melinda Gates Foundation, and World Bank Lead Economist Leora Klapper, recently wrote a blog post highlighting key facts and figures, some of which are: 
  • Sixty-two percent of the world’s adult population has an account, up from 51 percent in 2011
  • In developing economies, account ownership rose disproportionately among adults living in the poorest 40 percent of households.
  • Worldwide, account penetration among women rose from 47 percent in 2011 to 58 percent in 2014

Read the full blog post here.

The world is about as poor as we thought, and the fight to end poverty remains ambitious

Espen Beer Prydz's picture
World Bank estimates of global extreme poverty rely on many different data sources – among these are the price data that measure differences in the cost of purchasing a bundle of goods across countries. This measure of purchasing power parity (PPP) is used to ensure that the international poverty line reflects the same real standard of living across countries. Last year, the International Comparison Program (ICP) released PPP data from 2011, the first global update since the 2005 round.

Nigeria, where is your bourgeoisie?

Vasco Molini's picture
The Phrase, “Nigeria: the giant of Africa”, has been on the lips of its citizens lately, and to an extent, they have earned the right to say so. Over the last decade, the Nigerian economy experienced tremendous growth and was recently named Africa’s Number One Economy by The Economist. This accolade is due to the recent GDP rebasing, which has enabled the size of the Nigerian economy to surpass that of South Africa, as well as a solid growth record. This fast economic growth is reflected in an increase in specialized professionals that predominantly make up Nigeria’s Middle Class.

Reframing and other “small miracles” for development

Allison Demeritt's picture
In a famous psychological experiment, subjects are shown a basketball video, about a minute long, and are asked to count the number of passes made by the team wearing white. Thirty seconds into the video, a woman in a black gorilla suit enters stage right, walks to the middle of the screen, pounds her chest, and then exits stage left. How many of the viewers noticed the gorilla? It’s tempting to predict that all of them did. But in fact less than 50% of video-watchers report seeing the gorilla (Simons and Chabris 1999). How do such oversights happen? And can the experiment tell us something about development?  
 
Selective attention test

Research at Work 2015: Turning Insight into Impact

Asli Demirgüç-Kunt's picture

As the World Bank takes stock following its annual Spring Meetings, it’s clear that rigorous and policy-relevant research remains a critical element in achieving the goals of the institution. From informing the Bank’s Twin Goals in our latest Policy Research Report to creating the Findex database that underlies the institution’s commitment to achieving universal financial inclusion, research continues to shape the Bank’s agenda and provide the foundation of evidence-based policy advice sought by its clients. Without the independent scrutiny of research, the conceptual and empirical foundations for policymaking would be weak, “best practices” would be emulated without sufficient evidence, and new fads and fashions would get more attention and traction than they deserve.
 

India, China and our growth forecasts

Kaushik Basu's picture

Last month, the World Bank and IMF both put out predictions that, this year, India would overtake China in terms of GDP growth rate. This caused a flutter and was widely reported around the world. How robust is this prediction and what does it really mean?

First, this is not as monumental a milestone as some commentators made it out to be. China has had one of the most remarkable growth runs witnessed in human history, having exceeded an annual growth of 9% from 1980 to now. Four decades ago its per capita income was close to India’s, but now it is four times as large as India’s. None of all this is going to change in a hurry.

With this caveat in mind, it is a year in which India deserves to feel good. It is expected to top the World Bank’s chart of growth rates in major nations of the world. This has never happened before. Before 1990, India did occasionally grow faster than China, mainly because China’s growth gyrated wildly during the pre-Deng Xiaoping period. It was, for instance, minus 27% in 1961, when Mao Zedong’s Great Leap Forward resulted in the world’s biggest famine, and it was 17% and 19% in 1969 and 1970, respectively--a relief in the wake of the Cultural Revolution. Fluctuations of this magnitude would be intolerable to India’s polity.

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