Davos attendees should beware the slowing of potential growth
Brookings Up Front, January 22, 2018
The global economy is finally delivering solid growth and outpacing expectations after several years of disappointing performance, something World Economic Forum attendees in Davos will surely celebrate. At the same time, they will be doubling down on their efforts to find solutions for making globalization more equitable.
Global leaders in Davos should also take advantage of the growth momentum to prepare for possibly stormier times ahead. After all, the theme of this year’s meeting is “Creating a Shared Future in a Fractured World.”
Read the blog by Ayhan Kose.
Migration: The future depends on our actions today
Medium, 22 January 2018
Around 250 million migrants currently live outside their countries of birth, making up approximately 3.5 percent of the world population. Despite the widespread perception of a global migration crisis, this ratio has stayed remarkably stable since the end of the Second World War and lags well behind other major metrics of globalization — international trade, capital flows, tourism etc. A more remarkable statistic is that refugees, at around 15 million, account for 6 percent of the migrant population and only 0.2 percent of world population. In other words, we can fit all refugees in the world in a city with an area of 5000 square kilometers — roughly the size of metropolitan Istanbul or London or Paris — and still have some space left over.
Read the blog by Çaglar Özden.
A glimpse into state financial institution ownership in Europe and Central Asia
All about Finance, 22 January 2018
State-owned financial institutions (SOFIs) are back in vogue. Although the theoretical and empirical debate on state ownership in finance may continue to sway back and forth, the 2007–08 global financial crisis renewed policy makers’ interest in SOFIs as a policy instrument.
This interest is particularly visible in countries in Europe and Central Asia (ECA), where policy makers have turned to SOFIs for countercyclical interventions, as quantitative easing appears to have little impact on economic growth; the cost of bailing out privately-owned financial institutions has mounted; and many countries face significant fiscal constraints. From the publicly-owned British Business Bank(established to assist smaller businesses), to the Investment Plan for Europe (the “Juncker Plan,” which relies on “National Promotional Banks” to intermediate resources from the European Fund for Strategic Investments), SOFIs have been used to fill perceived gaps or complement the public policy toolkit.
Read the blog by Aurora Ferrari, Davide Salvatore Mare, and Ilias Skamnelos.
Can predicting successful entrepreneurship go beyond “choose smart guys in their 30s”? Comparing machine learning and expert judge predictions
Development Impact, 22 January 2018
Business plan competitions have increasingly become one policy option used to identify and support high-growth potential businesses. For example, the World Bank has helped design and support these programs in a number of sub-Saharan African countries, including Côte d’Ivoire, Gabon, Guinea-Bissau, Kenya, Nigeria, Rwanda, Senegal, Somalia, South Sudan, Tanzania, and Uganda. These competitions often attract large numbers of applications, raising the question of how do you identify which business owners are most likely to succeed?
In a recent working paper, Dario Sansone and I compare three different approaches to answering this question, in the context of Nigeria’s YouWiN! program. Nigerians aged 18 to 40 could apply with either a new or existing business. The first year of this program attracted almost 24,000 applications, and the third year over 100,000 applications. After a preliminary screening and scoring, the top 6,000 were invited to a 4-day business plan training workshop, and then could submit business plans, with 1,200 winners each chosen to receive an average of US$50,000 each. We use data from the first year of this program, together with follow-up surveys over three years, to determine how well different approaches would do in predicting which entrants will have the most successful businesses.
Read the blog by David McKenzie.
Why the global economy could be turning a significant corner, in six charts
Let’s Talk Development, 19 January 2018
2018 will likely mark a turning point for the global economy. For the first time since 2008, the negative global output gap — defined as the difference between the levels of actual output and output if operating at full capacity — is expected to close. As the output gap closes in advanced economies, central banks are likely to normalize monetary policy after a decade of exceptional easing. With this anticipated withdrawal of stimulus by advanced economies, emerging market and developing economy policymakers need to remain alert to the potential for adverse spillovers.
Read the blog by Ayhan Kose, Franziska Ohnsorge, and Modeste Some.
What do we learn from increasing teacher salaries in Indonesia? More than the students did
Development Impact, 17 January 2018
Money matters in education. Recent evidence from the United States shows that increased education spending results in more completed years of schooling and higher subsequent wages for adults. Spending cuts during the Great Recession — also in the U.S. — were associated with reduced student test scores and graduation rates.
Read the blog by David Evans.
Beyond cross-border banking: Debt issuance activity after the global financial crisis
All about Finance, 10 January 2018
Global banks had rapidly expanded their lending activities abroad before the global financial crisis, during the 1990s and early 2000s. Between 1991 and 2007, the volume of syndicated loan issuances a year by nonfinancial corporations increased more than seven times in high-income countries and more than eight times in developing ones (figure 1). However, the global financial crisis (GFC) hit global banks in the developed world especially hard, which reacted by reducing their cross-border lending activities worldwide.
Read the blog by Juan Jose Cortina Lorente and Sergio Schmukler.
Building solid foundations: How to promote potential growth, in six charts
Let’s Talk Development, 10 January 2018
Despite an acceleration of global economic activity, potential output growth (the growth that can be sustained at full employment and capacity) has slowed. The slowdown reflected weak investment growth, slowing productivity growth, and demographic trends. These forces will continue, and, unless countered, will depress global potential growth further over the next ten years.
Read the blog by Franziska Ohnsorge and Sinem Kilic Celik.
Six Questions with Mark Rosenzweig
Development Impact, 10 January 2018
Mark Rosenzweig is Frank Altschul Professor of International Economics at Yale University, and was one of the original leaders in bringing theory and micro-level data to addressing development questions. We caught up with him after a recent symposium, which honored his achievements, and celebrated him turning 70 and continuing to produce important new work.
Read the blog by David McKenzie.
Expanding high-value agricultural exports from Africa
IFPRI Blog, 5 January 2018
Agricultural exports have been transformed in recent decades, moving away from bulk crops to focus more on processed food products and horticultural products. Worldwide, the share of bulk agricultural products in total agricultural exports fell from 25 percent to 17 percent between 1988 and 2014; during that same period, exports of horticultural products rose to 12 percent and exports of processed food products reached almost 75 percent. This change in the structure of world agricultural markets has created many new opportunities for exporters, jobs for workers and export earnings for countries.
In Africa south of the Sahara, the share of bulk goods in agricultural exports has also declined, from 60 to 42 percent, while the share of processed agricultural goods rose to 35 percent, as against 75 percent for the world. However, the transformation of agricultural exports proceeded more rapidly in Africa than elsewhere in horticultural products, which accounted for 22 percent of African exports in 2014.
In an IFPRI Discussion Paper based on work commissioned by UN WIDER, we examine different policies that could help African countries speed up growth in exports of higher value products, such as horticultural crops and processed foods.
Read the blog by Will Martin and Emiko Fukase.
Top ten development impact blog posts of 2017
Development Impact, 5 January 2018
Before we begin new posts next week, here are the 2017 Development Impact posts that were most popular over the last year. In this case, popular = most page views.
10 journals for publishing a short economics paper
When should you cluster standard errors? New wisdom from the econometrics oracle
What’s the latest in development economics research? A round-up of 140+ papers from NEUDC 2017
The State of Development Journals 2017: Quality, Acceptance Rates, and Review Times
Fact checking universal basic income: can we transfer our way out of poverty?
Read the blog by David Evans.
How does anthropology help us understand bureaucracy?
Governance for Development, 4 January 2018
In rural Tanzania, more than seven million citizens lack reliable access to clean water. At any given time, 46 percent of rural water points need repair. An all too easy way to rationalize government shortcomings would be to label officials as lazy or corrupt. However, this statement oversimplifies the issue at hand and fails to dive deeper into the underlying bureaucratic structures that hinder successful service delivery.
Anthropologist Julia Bailey spent five months embedded with civil servants in Tanzanian water departments and recently published a World Bank Working Paper on her findings. According to Matthew Hull and Colin Hoag, anthropologists who have put together a literature review of the anthropological literature on bureaucracy for the Bureaucracy Lab, researchers like Julia can help us better understand how bureaucracies function.
Read the blog by Daniel Rogger and Chris Lewis.
Weekly links Jan 5: papers you should have read last year, how to measure early childhood development 147 ways, move people to where the jobs are, and more…
Development Impact, 4 January 2018
Read the blog by David McKenzie.
World Bank tips Malawi on institutional reforms
The Nation (Malawi), 2 January 2018
Public sector specialist, Kate Bridges, and World Bank lead social scientist, Michael Woolcock, have advised government to shift approach to institutional reforms.
In a paper entitled “How (Not) to Fix Problems That Matter: Assessing and Responding to Malawi’s History of Institutional Reform”, the duo recommends the applicability of what are increasingly termed problem-driven approaches.
Read the article.
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