Many people have the misconception that my field -- global development -- is just about do-gooders and charities helping the poor. To be sure, many charitable groups are doing generous, laudable work. But global development extends far beyond charity and has a greater impact on the global economy than most people think.
Strong economic growth in developing countries became an engine for the global economy after the 2008-09 financial crisis, accounting for roughly 50 percent of all global growth. In addition, fully half of the United States’ exports now go to emerging markets and developing economies.
Global economic development can be good for your bottom line. Our focus is on helping more than a billion poor people lift themselves out of extreme poverty and on boosting the incomes of the poorest 40 percent in developing countries. To do that, we need to find economic growth strategies that help all segments of society in emerging markets -- reaching even fragile states striving to put years of conflict behind them and to create good jobs for their people.
The question I ask my team all the time is, what’s our plan? Increasingly scarce public funding isn’t enough to get the job done. We need to attract private sector investment that creates jobs. Ninety percent of all jobs in the developing world are created by the private sector. If we have high aspirations for the poor and vulnerable, there is no argument: We need the private sector to flourish, even in the poorest countries.
At the World Bank Group, we’re focused on three main paths toward strengthening economies in developing countries:
First, we need growth that is inclusive. We now have good evidence that the best strategy for countries is to foster the kind of economic development that will include everyone. A good strategy both economically and politically is ensuring that a growing economy benefits the poorest 40 percent of the population.
Conversely, when nations exclude people because of their gender, ethnicity, age, religion, sexual orientation, or other reasons, then their economy suffers, and the frustrations of those excluded can spill into the streets. Growth without inclusion is unsustainable, and threatens the prosperity and security of all countries.
Second, countries need to invest in their people. Investing in education, health, andsocial protection not only pays off for individuals whose lives are improved, we now have evidence that it contributes directly to economic growth and greater stability for their countries.
For most poor people, a good job is the key to escaping poverty. To get those jobs, they’ll need good skills, a quality education, and years of good health as they’re growing up and when they’re adults.
A commission led by Nobel laureate Michael Spence found that countries with the best growth performance invested 7 to 8 percent of their GDP in education, job training, and health. Furthermore, if low-income countries could achieve equal numbers of men and women in entrepreneurship and the labor force, it would boost GDP per capita by 15 percent.
And third, we must never lose sight of the deepening threat of climate change. Climate change could erase decades of progress in poverty reduction. The poor are the first and the most severely hurt by its effects -- but all nations’ economies suffer as well. If we don’t confront climate change, we won’t end extreme poverty, and we’ll leave an awful legacy for our own children and grandchildren in the process.
We have an historic opportunity. We can end extreme poverty in our lifetimes if we promote economic growth that includes everyone, invest in people, and protect opportunities for future generations by fighting climate change. At the same time, by creating conditions for strong and sustainable growth, developing countries’ economies will continue to help fuel the global economy. This isn’t a zero-sum game. Working together, we can build a more prosperous, sustainable and just world.
This post first appeared in LinkedIn Influencers.