Archive for the ‘Development’ Category
Monday, August 9th, 2010
I have just read a very interesting article with the title shown above, by Professor David Hulme, Professor of Development Studies, University of Manchester published in The World Today by Chatham House.
In the article he looks at the eight millennium development goals and how close we are to achieving them.
He writes: “When world leaders meet in New York in September they will laud the progress that has been made on the Millenium Development Goals, note somberly that much more needs to be done and then promise to do more before 2015 to get them ‘back on track’.
Meanwhile developed countries are slashing government spending and there are still 1.4 billion people living below the $1.25-a-day global poverty line.
You can access the article here.
Tags: Millenium development goals, poverty
Posted in Development | No Comments »
Tuesday, May 11th, 2010
UNCTAD Secretary-General Supachai Panitchpakd, Secretary-General of Unctad, said in opening the organization’s symposium in Geneva yesterday that since the crisis hit in 2008, some 53 million people in the developing world have fallen below the poverty line “and more than 100 million additional people are going hungry. These numbers are not moving in the right direction.”
“Prior to the crisis, the chances of achieving the MDGs (Millennium Development Goals) were deteriorating,” he told the meeting. “Now, after the crisis, it will be near to impossible to achieve all of the MDGs.” The goals are centred around the target of halving extreme poverty by 2015.
The Secretary-General said developing countries should look to one another for support, noting that “South-South” regional trade and financial arrangements have been vital in recent years for providing investment, stable economic arrangements, and climbing trade. He also referred to developing countries as “the innocent bystanders of the most severe recession in 70 years. We cannot just go on with business as usual. We have yet to see ‘human recovery’ from the recession.”
 Developing countries are suffering the fall-out from the global credit crisis. And David Nabarro, Special Representative on Food Security and Nutrition of the United Nations High-level Task Force on the Global Food Security Crisis, said “the food crisis is still with us, and it’s alarming, with around 1 billion people hungry around the world, despite record grain harvests last year. . . There are very great challenges that aren’t going be resolved simply by government decrees.” Extensive structural reforms are needed in which the focus is on agricultural production “within communities, depending on partnerships between smallholder farmers, communities, and civil society,” he said. There should be “partnership between all nations” and not merely a focus on productions statistics alone.
Another representative of the UN said that “It is very important to put more money into agriculture,” as productivity, especially in Africa, has lagged far behind farming yields in more developed regions. When food shortages surfaced in 2008, he said, “the result was that these countries were unable to respond.”
Several speakers spoke of concern about financial speculation and called for controls on fluctuations in food prices to prevent speculation from causing price increases that don’t represent “real” demand for food. And they said governments have a role to play in the prices of staple foods, to protect the needs of smallholder farmers and to protect food security.
It is important and timely that Unctad has drawn attention to the plight of developing countries that are suffering a fall-out from the financial crisis. They have been affected indirectly by the slowdown in trade, cutbacks in overseas aid in some areas and a slowdown in foreign direct investment.
Tags: credit crisis, Development, Millennium Goals, Overseas Aid, poverty, trade
Posted in Development, International, World Trade, aid | No Comments »
Tuesday, April 20th, 2010
I have just read an interesting blog by Wolfgang Fengler on one of the World Bank’s websites. He notes the fact that Africa’s population is rising rapidly and will soon pass the one billion mark. In fact the UN’s projections expect this to rise to 1.7 billion by 2050, although this is based on declining fertility, and Fengler believes that population could even reach 2 billion.
By 2050 Africa will contain over 20% of the total world population, given the current rate of expansion. Normally we would regard this as a major problem, although Fengler puts forward three reasons why this may not be true, and draws some of his conclusions from examples in Kenya.
Firstly, he argues that there is plenty of room for expansion in Africa. For example, there are on average 170 people per square km living in Europe but only 70 per sq km in sub-Saharan Africa at the present moment.
 This photo was taken on a previous visit to Kahama, Tanzania. But can rapid population growth actually stimulate economic growth? Secondly, he makes the point that previous population growth has been driven by increasing numbers of young children. However, future population growth will be driven by improved life expectancy and also the fact that although there is a wider base of young adults at the moment, the number of children per family is declining. In fact in Kenya the number of children per family was 8.1 in 1978 and this has fallen to 4.6 in 2008 and is expected to reach 2.4 in 2050. The number of adults is expected to triple from 21 million to about 60 million by 2050.
Finally, he argues that population growth and urbanisation go together, with economic growth being closely linked to urbanisation. He says that no country has ever reached high income levels with low urbanisation, and the move to the cities allows for increased innovation and economies of scale. He cites the fact that companies in Kenya even now are targeting the ‘bottom of the pyramid’ where there is growth in the lower and lower-middle income groups.
To read the full article click here.
Tags: Africa, economic growth, life expectancy, macroeconomics, Population, urbanisation
Posted in Africa, Development, Population, economic growth | No Comments »
Wednesday, September 23rd, 2009
Developing Asia, which excludes Japan, Australia and New Zealand, is set to expand growth by 3.9% in 2009 and 6.4% in 2010, according to the Asian Development Bank (ADB). These growth figures have been raised from the forecast last March of 3.4% and 6.0% respectively.
“Despite worsening conditions in the global economic environment, developing Asia is poised to lead the recovery from the worldwide slowdown,” said ADB Chief Economist Jong-Wha Lee.
According to the ADB’s newly published Asian Development Outlook (ADO) 2009, there are several reasons for Asia’s enhanced growth prospects. These include: the firm action taken by many governments and central banks in the region; the relatively healthy state of financial systems before the global crisis hit; and, the rapid turnaround in the larger, less export-dependent economies in the region.
The expected rapid growth is being led by China and India. The massive fiscal stimulus package and aggressive monetary easing put in place in the People’s Republic of China has led to growth forecasts of 8.2% in 2009 and 8.9% in 2010. Also, the ADB expects India to grow by 6.0% this year as a result of a large fiscal stimulus announced in July and a recovery in business confidence.
Other areas in the region are not faring quite so well. Hong Kong and Taipei are expected to shrink sharply due to a severe drop in demand for exports and countries like the Maldives have been hit by a drop in tourism.
However, Dr Lee warned that: “The improved regional outlook should not make developing Asian economies complacent. A protracted global slowdown or the hasty withdrawal of stimulus packages can degrade the region’s ongoing recovery.”
The ADB warned that if the area was to develop more resilient economies it would have to broaden the scope and structure of its openness. This would include reducing its vulnerability to external shocks by tackling the geographically unbalanced structure of its trade, capital flows and movement of workers.
The report concluded that: “By promoting closer economic linkages within the region and a more balanced internal economic structure with a bigger role for domestic demand, policy makers in developing Asia will be able to achieve rapid yet stable growth for the region.”
Tags: Asian Development Bank, China, India, world economy. development
Posted in Asia, China, Development, World Trade | No Comments »
Monday, August 3rd, 2009
Last week the United Nations Conference on Trade and Development (UNCTAD) held a one-day meeting on “the contribution of migrants to development”. This followed a 2008 conference which said that UNCTAD should “conduct research and analysis on the potential benefits and opportunities of trade, investment and developmental links between migrants’ countries of origin and their communities abroad” and should “analyse the potential of migrants’ remittances to contribute to development.”
The follow-up meeting in Geneva last week found that rising unemployment caused by the global recession was damping flows of migrant workers and many were returning to their home countries. This is against an estimated 240 million who have lost their jobs as a result of the recession.
Loss of jobs was particularly noted in construction and manufacturing and for women the effect will be felt most in health care, education and domestic servicews.
 The decline in migration will reduce remittances going back to developing countries UNCTAD Secretary-General, Supachai Panitchpakdi said there was a need to regulate migration fairly and humanely but also to harness migration for development. He was concerned that we ensure that knowledge and technology and “circular migration” help to advance the economies of the sending countries, and avoid the negative effects of any “brain drain” on these countries.
According to Sha Zukang, of the UN Department of Economic and Social Affairs, there has been a deceleration in the growth of the number of migrants in recent years and that future migration flows are likely to be further dampened by high unemployment. He also noted that the increasing proportion of female migrants which has developed over recent years now seems to have ceased, as the proportion of women amongst migrants has declined slightly.
William Swing, Director-General of the International Organisation for Migration noted that remittances going back to the developing countries from where migrants had come from, were now falling and were expected to drop by 9% this year. When this is added to the expected decline in official development assistance and foreign direct investment it will obviously have a major impact on poorer countries.
Tags: developing countries, Foreign Direct Investment, migration, overseas development aid
Posted in Development, Immigration | No Comments »
Friday, July 17th, 2009
The UN Conference on Trade and Development (Unctad) has just published its “Least Developed Countries Report 2009”, which looks at the world’s 49 poorest countries.
The report says the Least Developed Countries (LDCs) need to focus macroeconomic policy on building up both the productive capacity of their economies and infrastructure. Also, they need to ensure that their fledgling banking sectors lend towards productive activities rather than government portfolios and real estate.
Given the current crisis, LDCs will find it difficult to take corrective action of this nature and will still be dependent on Official development assistance (ODA). Although the report notes that this has often been wrongly directed in the past and has been used as a substitute for fiscal revenues. The report urges that ODA be maintained or even raised during the current crisis, with even more emphasis on debt relief, but that the aid should increasingly be used to bolster economic infrastructure whilst making it possible to raise more revenue through the domestic economy.
Unctad takes a swipe at the World Bank and IMF, who it maintains have, for the last three decades, encouraged LDCs to concentrate on using monetary policy to contain inflation, whilst ensuring fiscal policy keeps budget deficits at a moderate level. At the same time little emphasis has been placed on public investment as a vehicle to promote economic development.
The report argues that LDCs should now refocus their economic objectives to develop their productive capacities to produce more varied and sophisticated products. This will mean adopting expansionary fiscal policies and accommodating monetary policies, together with the maintenance of exchange rates and capital flows. Greater investment into agriculture and infrastructure as well as health and education will help draw in private investment and raise labour productivity, as well as combating poverty, generating employment, reducing inequality and diversifying economic structure.
How can states raise public investment to the necessary levels? They need to improve tax revenues which in 2000-2006 only rose marginally in LDCs to 12% of GDP, despite strong economic growth, which compares to tax takes of 30-60% in richer countries. The report calls for a halt on further trade liberalisation, an increase in tax on luxury goods, an improvement in the effectiveness of taxes on high incomes and corporations and a strengthening of property taxes.
Too much attention has been placed by LDCs on using monetary policy to reduce inflation. The report concedes that inflation has fallen, but that restrictive monetary policy has delivered high real interest rates on average, which has made much investment unviable.
In conclusion, the report suggests that LDCs manage their capital accounts to deal effectively with the two major problems of capital flight and short-term capital volatility. It also calls for managed exchange rate systems – such as a managed float or loose adjustable peg system – which would allow LDCs to maintain the competitiveness of their exports.
Tags: aid, exchange rate policy, IMF, Least developed countries, macroeconomic policy, monetary policy, Unctad, World Bank
Posted in Development, Ezine, Fiscal stimulus, International Monetary Fund, Low-income countries, World Bank, aid | No Comments »
Thursday, July 2nd, 2009
Developing countries have not been immune from the global recession or the fragile nature of financial markets. In fact, net private capital inflows to developing countries fell to $707 billion in 2008, which was a severe drop from the peak figure of $1.2 trillion in 2007. It is projected that international capital flows will fall further in 2009 to $363 billion. It would appear that acquiring assets in developing countries is seen as higher risk and low priority at the moment by western economies. This is in contrast to the increase in FDI projects which came into the UK during the 2008-2009 financial year as recorded in my blog of 29 June.
These figures are included in the new publication from the World Bank entitled, Global Development Finance 2009: Charting a Global Recovery. This briefing also warns that developing countries are expected to grow by only 1.2% this year, which is a serious decline from the 8.1% growth recorded in 2007 and 5.9% in 2008. In fact the situation can be shown to be even worse when India and China are excluded from the calculation. Then, GDP for the remaining developing countries is projected to fall by 1.6% with implications for greater job losses and increased poverty.
 The future is less secure for these children in Tanzania
Sub-Saharan Africa has been particularly hard hit by falling demand for exports, plunging export prices, weaker remittances as tourists holiday at home, and sharp falls in FDI growth. So much so that growth is expected to be only 1.0% this year.
Forecasts for developing countries as a whole for 2010 and 2011 show GDP growth is expected to pick up to 4.4% and 5.7% respectively, although this will still be slower than the years immediately before the recession.
According to Justin Lin, World Bank Chief Economist and Senior Vice President, Development Economics: “Developing countries can become a key driving force in the recovery, assuming their domestic investments rebound with international support, including a resumption in the flow of international credit.”
Tags: developing countries, FDI, GDP, global crisis, World Bank
Posted in Africa, Development, Foreign Direct Investment, GDP, International, Low-income countries, World Bank, economic growth | No Comments »
Tuesday, April 7th, 2009
The World Bank now predicts that global GDP growth will now contract by 1.7% in 2009, which means that world output will contract for the first time since the 2nd World War.
According to Hans Timmer, Manager, Global Trends in the World Bank’s Development Prospects Group: “Even if global growth turns positive again in 2010, we are not yet out of the woods. We expect that the level of GDP will remain well below potential, and so economic distress will remain acute for the next two years.”
Last November, the World Bank forecast a growth of 4.4% in the developing world this year, but this has now been more than halved down to 2.1%. A weak recovery is now expected next year but the pace and timing remain highly uncertain.
 The forecast growth for developing countries has been reduced, and countries such as Lesotho, shown here, will be hard hit because of their dependance on trade
The World Bank notes that the crisis was preceded by eight years of extraordinary growth in developing countries which was supported by double-digit growth in investments, pointing out that investments have now been especially hard hit by the tough financial conditions. As industrial production has declined a sharp fall in commodity prices has followed, with oil prices down more than 50% and non-oil commodity prices showing a 40% fall.
The World Bank also now expects a 6.1% contraction in the volume of world trade in goods and services this year, and notes that the value of world trade will collapse much more because of the fall in commodity prices.
All this has had serious repercussions on developing countries as government revenues have been hit hard. In countries such as Lesotho, Swaziland and Cote d’Ivoire, for example, between 40% and 50% of fiscal revenues come from trade.
Finally, the World Bank forecasts that world GDP growth is likely to increase by 2.3% in 2010, although there are still significant downside risks.
Tags: developing countries, economic forecastls, economic growth, GDP, global recession, World Bank, World Trade
Posted in Development, GDP, International, Investment, Low-income countries, World Bank, World Trade, recession | No Comments »
Tuesday, March 31st, 2009
Figures published by the OECD yesterday show that total net official development assistance (ODA) from members of the OECD’s Development Assistance Committee (DAC) rose by 10.2% in real terms in 2008 to reach $119.8bn. This is the highest dollar figure ever recorded. In total, it represents 0.30% of member countries combined gross national income (GNI).
This is great news for the developing world at the present time of economic crisis. A 10% real increase is very welcome at a time when: world trade is experiencing its largest decline since 1929 and commodity prices are falling; foreign direct investment is declining; and, the budget position of many developing countries has been hit hard by the increases in food and oil prices over the past couple of years. Altogether, this means that many developing countries are not in a strong fiscal position to deal with the current crisis.
In terms of giving, the US continues to be the largest gross donor, donating $26bn in 2008, which was a real increase of 16.8%. Even so, with a ratio of ODA to GNI of 0.18%, the US is still well below the UN target for developed countries to give 0.7% of their Gross National Income. Other major givers are Germany, UK, France and Japan. In terms of GNI ratios, the leading countries are Sweden, Luxembourg, Norway, Denmark and Netherlands, all of whom exceed the UN target. The overall picture can be seen in the graphic below.
In 2005 major donors at the Gleneagles G8 and other summits pledged to lift aid from $80bn in 2004 to $130bn in 2010, at constant 2004 prices. But, the OECD notes that the prospects of economic contraction this year will reduce the level of dollar commitments. They believe that current commitments imply an aid level of $121bn in 2010, which will be below target.
The OECD points out that whilst the full effects and duration of the financial crisis are still to be seen, it is important for aid to play a countercyclical role to help balance the sharp reversal in overall flows to developing countries. The organisation said: “Only a special crisis-related effort can ensure that the 2010 targets for aid are met, which is even more important now that the economic crisis is reducing developing countries’ growth prospects and their ability to make progress towards the Millennium Development Goals.”
Tags: developing countries, development aid, fiscal crisis, Millennium Goals, OECD
Posted in Development, International, Low-income countries, aid | No Comments »
Wednesday, March 18th, 2009
In a paper prepared for last weekend’s G20 meeting of Finance Ministers, the World Bank said that the global economy is likely to shrink this year for the first time since the second world war. With growth at least 5 percentage points below potential, the World Bank forecasts that global industrial production could be as much as 15% lower by the middle of 2009 compared to levels in 2008. World trade is also on track to record its largest decline in 80 years, with the sharpest losses being experienced in East Asia.
The World Bank also said that developing countries face a financing shortfall of $270-700 billion this year. The paper said that 94 out of 116 developing countries have experienced a slowdown in economic growth. Of these countries, 43 have high levels of poverty. The sectors which are most affected are those which are typically urban-based exporters, construction, mining and manufacturing. Cambodia, for example, has lost 30,000 jobs in the garment industry.
 Global economy set to shrink and world trade to decline
The World Bank Group President, Robert B Zoellick said: “We need to react in real time to a growing crisis that is hurting people in developing countries. This global crisis needs a global solution and preventing an economic catastrophe in developing countries is important for global efforts to overcome this crisis. We need investments in safety nets, infrastructure, and small and medium size companies to create jobs and to avoid social and political unrest.”
The paper also said that many of the world’s poorest countries are becoming ever more dependent on development assistance as their exports and fiscal revenues decline because of the crisis. The developed world is already behind by around $39 billion on commitments made at the Gleneagles Summit in 2005, and the concern is that some countries will now start to cut their aid budgets. World Bank Chief Economist, Justin Yifu Lin said: “Clearly fiscal resources do have to be injected in rich countries that are at the epicentre of the crisis, but channelling infrastructure investment to the developing world where it can release bottlenecks to growth and quickly restore demand can have an even bigger bang for the buck and should be a key element to recovery.”
Tags: Development, global economy, World Bank, world tade
Posted in Development, International, Low-income countries, World Trade | No Comments »
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