Economic Premise

121 items available

Permanent URI for this collection

http://hdl.handle.net/10986/9402

The Economic Premise series summarizes good practices and key policy findings on topics related to economic policy. They are produced by the Poverty Reduction and Economic Management (PREM) Network Vice-Presidency of the World Bank.

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Now showing 1 - 10 of 23

Inclusive Growth Revisited: Measurement and Determinants

(World Bank, Washington, DC, 2013-07) Anand, Rahul ; Mishra, Saurabh ; Peiris, Shanaka J.

The call for inclusive growth has been unanimously broadcasted by policy makers across the world. The Arab spring, the growing divide between Main Street and Wall Street in advanced economies, and the three-speed world economy have placed inclusive growth at the forefront of policy debates. However, efforts to measure and assess the determinants of inclusive growth have remained limited. What is inclusive growth? How can the micro and macro dimensions of inequality and growth be integrated to reflect both the pace and distribution of economic growth? What has driven inclusive growth in emerging markets?
From Noise to Signal : The Successful Turnaround of Poverty Measurement in Colombia

(World Bank, Washington, DC, 2013-05) Azevedo, João Pedro

In the mid-2000s, poverty measurement in Colombia was at a standstill. A dated poverty measurement methodology was clashing with improvements in the national household survey system. As a result, official poverty rates showed volatile trends, and a weak communication strategy produced an unconvincing storyline, which further resulted in the rapid deterioration of indicator credibility. This happened during a period of high and sustained growth that also included a number of poverty reduction interventions, such as the flagship program familias en accion and the unidos strategy. The public debate on poverty lost focus and moved from substantial policy discussions to technical measurement methods.
Can Trade Reduce Poverty in Africa?

(World Bank, Washington, DC, 2013-04) Le Goff, Maëlan ; Singh, Rajun Jan

While most economists accept that, in the long run, open economies fare better in aggregate than closed ones, many fears that trade could harm the poor. African countries, for example, have realized significant improvements in trade liberalization in recent decades, yet Africa remains the poorest continent in the world. It seems that the large gains expected from opening up to international economic forces have been limited in Africa, especially for poor people. Drawing on the findings of a recently published working paper (Le Goff and Singh 2013), this note argues that the benefits of trade are not automatic, but rather depend on accompanying policies aimed at developing the financial sector, promoting primary education, and improving governance. This accompanying policy agenda allows people to take advantage of the opportunities offered by freer trade, by reallocating resources away from less productive activities to more promising ones. Trade liberalization therefore should not be implemented on its own, but with the necessary complementing policies.
Promoting Shared Prosperity in South Asia

(World Bank, Washington, DC, 2013-03) Ghani, Ejaz ; Iyer, Lakshmi ; Mishra, Saurabh

The geography of poverty has changed. More than 70 percent of the world s poor live not in low-income countries, but in middle-income countries. In 2008, nearly 570 million people lived on less than US$1.25 a day in South Asia, compared to 385 million in sub-Saharan Africa. In addition, nearly 70 percent of the poor people in South Asia live in the lagging regions. Improving the living standards of these regions is crucial to achieving the goal of shared prosperity. Economic growth is not sufficient to enable the lagging regions of South Asia to catch up with the leading regions, in terms of proportional reductions in poverty rates. Policies must be specifically targeted toward achieving greater growth and poverty reduction in these regions. One particular policy channel to achieve shared prosperity is pro-poor fiscal transfers. For the most part, interstate fiscal transfers in South Asian countries do promote equity through transfer of resources to poorer regions, but this outcome usually occurs when pro-poor redistribution has explicit rules and transparency. Further, simply directing financial resources to lagging regions may not be sufficient, and may need to be complemented with increases in capacity, transparency, and participation to facilitate accountability at the local level. Policy makers need to boost shared prosperity and take another look at the millennium development goal paradigm. A new lens is needed- one that shifts the focus of policy from national to subnational level, and from leading to lagging regions, where poverty, gender disparity, and human misery are concentrated.
Public Spending for Long-Run Growth : A Practitioners' View

(World Bank, Washington, DC, 2012-12) Gemmell, Norman ; Misch, Florian ; Moreno-Dodson, Blanca

By financing public goods and services that enhance productivity and promote private investment, public spending is widely believed to be critical for long-run growth. Such effects are distinct from any short-run Keynesian response to a public spending stimulus. While a short-run response generally operates through aggregate demand, long-run growth effects alter aggregate supply conditions. While academic literature generally supports the belief that public spending promotes growth in the long run, understanding which public expenditure allocations can trigger such effects in a particular country setting is challenging in practice. The objective of this note1 is to review the trade-offs faced by fiscal policy makers in developing countries who are considering using public expenditure policy as an instrument to promote long run growth, provide guidance from the empirical literature, and review the types of data sources that are helpful in this context.
Avoiding Middle-Income Growth Traps

( 2012-11) Agénor, Pierre-Richard ; Canuto, Otaviano ; Jelenic, Michael

Since the 1950s, rapid growth has allowed a significant number of countries to reach middle-income status; yet, very few have made the additional leap needed to become high-income economies. Rather, many developing countries have become caught in what has been called a middle-income trap, characterized by a sharp deceleration in growth and in the pace of productivity increases. Drawing on the findings of a recently released working paper (Agenor and Canuto 2012), as well as a growing body of research on growth slowdowns, this note provides an analytical characterization of 'middle-income traps' as stable, low-growth economic equilibrium where talent is misallocated and innovation stagnates. To counteract middle-income traps, there are a number of public policies that governments can pursue, such as improving access to advanced infrastructure, enhancing the protection of property rights, and reforming labor markets to reduce rigidities all implemented within a context where technological learning and research and development (R&D) are central to enhancing innovation. Such policies not only explain why some economies particularly in East Asia were able to avoid the middle-income trap, but are also instructive for other developing countries seeking to move up the income ladder and reach high-income status.
When Job Earnings Are Behind Poverty Reduction

(World Bank, Washington, DC, 2012-11) Inchauste, Gabriela ; Azevedo, João Pedro ; Olivieri, Sergio ; Saavedra, Jaime ; Winkler, Hernan

Improvement in labor market conditions has been the main explanation behind many of the poverty success stories observed in the last decade, that is the primary conclusion of an analysis of changes in poverty by income source. Changes in labor earnings were the largest contributor to poverty reduction for a sample of 16 countries where poverty increased substantially. In 10 of these countries, labor income explained more than half of the change in poverty, and in another 4 countries, it accounted for more than 40 percent of the reduction in poverty. A declining dependency rate accounts for over a fifth of the reduction in poverty in 10 out of 16 countries, while transfers and other non-earned incomes account for more than a quarter of the reduction in poverty in 9 of these countries. A further decomposition of the contribution of labor income to poverty reduction in Bangladesh, Peru, and Thailand found that changes in individual characteristics (education, work experience, and region of residence) were important, but that overall, increases in real earnings among the poor matter the most.
Service with a Smile

(World Bank, Washington, DC, 2012-11) Ghani, Ejaz ; Goswami, Arti Grover ; Kharas, Homi

Can service be a growth escalator? The world is experiencing its third industrial revolution, and services are at the forefront of this revolution. Services have already surpassed industry as a source of economic growth and job creation, in both developed and developing economies. In the industrial sector, technologies have matured and employment is shrinking. However, services are getting more sophisticated and jobs are expanding. Services growth is also more inclusive and sustainable. It increases the participation of women in the labor force and places a lighter burden on natural resources. The promise of the services revolution is that countries do not need to wait to get started with rapid development. There is a new boat that development latecomers can take.
Freedom, Entitlement, and the Path to Development

(World Bank, Washington, DC, 2011-06) Chauffour, Jean-Pierre

Twenty years after the revolutions of Central and Eastern Europe, the Arab Spring is again raising some fundamental questions about the place of freedom and entitlement in development. Depending on the balance between free choices and more coerced decisions, individual opportunities to learn, own, work, save, invest, trade, protect, and so forth could vary greatly across countries and over time. Reviewing the economic performance of more than 100 countries over the past 30 years, new empirical evidence tends to support the idea that economic freedom and civil and political liberties are the root causes of why certain countries achieve and sustain better economic outcomes. In contrast, entitlement rights do not seem to have any significant effects on long-term per capita income, except for a possible negative effect. These results tend to support earlier findings that, beyond core functions of government responsibility (including the protection of liberty itself), the expansion of the state to provide for various entitlements (including so-called economic, social, and cultural rights) may not make people richer in the long run; it may even make them poorer.
Rebalancing, Growth, and Development in a Multipolar Global Economy

(World Bank, Washington, DC, 2011-05) Qureshi, Zia

Reduction of large and persistent external imbalances is currently a key focus of G-20 discussions. The paper argues that in a progressively multipolar world economy, the goals of global rebalancing, growth, and development are increasingly inter-linked. Growth-oriented rebalancing calls for emphasizing structural reforms and leveraging the role of developing countries in supporting strong and balanced global growth.