Adverse events coming from systemic or idiosyncratic risks may destroy lives, assets, trust, and social stability. While risks in some areas have diminished in recent years (notably health, and economic crises in developing countries), risk has become more pronounced in other areas, including natural hazards, crime, the environment, and food prices. Especially when risk is mismanaged, the consequences can be severe, turning into crises with often unpredictable consequences.
An old proverb cautions that “an ounce of prevention is worth a pound of cure.” There is a lot of truth to this: interventions to prevent infectious disease and infant malnutrition have repeatedly been estimated to have very high returns, with benefit-cost ratios as high as 15 to 1.
The proverb also applies outside health. Time and again, failure to prevent and prepare has tragic and costly consequences—economic and financial crises, natural disasters, ruinous health outcomes, social unrest—that often could have been avoided at moderate cost. In 2010, an earthquake in Haiti cost more than 220,000 lives, while one of much larger magnitude in Chile produced about 500 fatalities. Chile’s enforcement of building codes appears to account for much of the difference.
Jobs have been at the center of my life since I took up my own new job as World Bank Chief Economist on October 1. This began within hours of my joining the Bank, when I participated in the press launch of the World Development Report 2013 on Jobs. Following that, my interactions at the Tokyo Annual Meetings of the World Bank and IMF also brought the jobs issue into high relief, with ministers and policymakers from around the world reacting to the WDR, especially in some of my corridor conversations with them.
I have a longstanding interest in labor-related issues, the role of labor laws, and on the impact of privatization on jobs. So I was pleased by the clairvoyance of the World Bank in choosing jobs as the topic for the 2013 World Development Report, much before the Bank knew that it would choose me to be the Chief Economist.
From the World Development Report 2013.
Jobs are on the move. The past four decades have been marked by the outsourcing of manufacturing tasks from industrial countries to the developing world, especially to East Asia.
When my team and I started working on the World Development Report 2013, slightly more than a year ago, we were puzzled. We had been asked to write about jobs, and there was no doubt that they were a major concern around the world. Events such as the global crisis or the Arab spring had put jobs center stage. In developing countries, finding employment opportunities for massive numbers of youth entering the labor force was urgent. Middle-income countries were struggling to move up the value-added ladder in production and to extend the coverage of social protection. Technology and globalization were changing the nature of work worldwide. In all cases, jobs were at stake. And they were clearly one of the main preoccupations of policy makers everywhere.
As I reported in my last post, Jim Kim’s arrival as World Bank President has reinvigorated the debate about the idea of the World Bank being a ‘knowledge bank’. In the post, I argued that the knowledge produced by the Bank – whether gleaned from its lending operations, or from its research and other analytic work – is a global public good, and that we should therefore assess the success of the institution in its knowledge work not in terms of how specific ‘client’ governments value the outputs of its knowledge work but rather in terms of how people around the world use and value them.
Sub-Saharan Africa (SSA) is home to the world’s poorest countries. The region’s geographical disadvantages are often viewed as an important deterrent to its economic development. A country’s geography directly affects economic development through its effect on disease burden, agricultural productivity or the availability of natural resources. However, the new economic geography (NEG) literature, initiated by Krugman (1991), highlights another mechanism through which geography affects prosperity.