PSD Blog - The World Bank Group

Keynesian multipliers and market economies with a human face

Gearing up for the G20 summit on April 2, World Bank President Robert Zoellick made a speech this morning in London on the growth outlook for the developing world and what the G20 can do about it. Prospects look dim - newly released forecasts from the World Bank project growth of 2.1 percent in the developing world in 2009.

So what can be done about it? Among many other things, Zoellick has been calling for the creation of a Vulnerability Fund. Rich countries would place 0.7% of any stimulus package into this fund to support social safety net programs, infrastructure, SMEs, and the like in developing countries. This proposal has not gone without criticism - the most scathing (that I am aware of) comes from Bill Easterly:

President Zoellick does mention briefly the critical issue in both the NYT and FT: some “safeguards to ensure that the money is well spent,” which don’t currently exist. In the FT, he makes the inspirational call for an “Age of Responsibility,” but the Responsibility seems to apply only to rich donors, there is nothing about holding the World Bank responsible.

African bloggers make some noise

Can blogging transform societies? More provocatively, can it speed up the process of development? We're about to find out: the African Bloggers Conference will be taking place in Nairobi this August. This will be the first of what the organizers are hoping will become an annual event. And they're looking for sponsors. Hello, Bill Gates? Are you listening? The antics at the TED2009 conference were fun, but this is your chance to support homegrown change.

(Thanks to Giulio Quaggiotto for the pointer.)  

Corporate debt in Eastern Europe

Bloomberg reports:

OAO United Aircraft Corp. will help its Finance Leasing Co. unit repay $250 million to bondholders after it became the first state-run Russian company in more than a decade to default on a foreign-currency coupon payment, Deputy Prime Minister Sergei Ivanov said.

Bloomberg also reports that Russian companies owe some $100 billion in foreign-currency debt due in 2009. Estimates for all emerging market corporations in 2009 range from $1.25 to $2 trillion.

Questioning the President

If you have a question for World Bank President Robert Zoellick, now is your chance to ask. Reuters is collecting questions online, and Zoellick will be responding in a speech next Tuesday. Just follow this link and add your questions to the comments section. (For the Web 2.0 savvy, you can also use the #askwb tag on Twitter.)

Sins of trade protectionism

A new collection of articles from Brookings provides policymakers some advice heading into the G20 summit on April 2. One of the articles - Tame Protectionism and Revitalize Trade - urges the G20 leaders to avoid making high-minded but empty commitments to free trade and instead take a defensive posture. Author Paul Blustein argues in particular that leaders need to avoid subsidizing industries that aren't systematically important. Or as he perhaps more colorfully puts it:

...the G-20 needs to...draw a distinction between “mortal” and “venial” sin—promising never to commit the former, while treating the latter as forgivable. To qualify for venial sin treatment, subsidies should meet a series of tests. The two most important are that 1) the industry being subsidized is systemically critical to the national economy, and 2) the subsidy being provided is clearly temporary, and will be withdrawn by a specified time period (say, two years).

The financial crisis is history

Well, at least part of it.

(Hat tip: Slog)

More support for good jobs

Some months ago I discussed a paper on the myth of the entrepreneurial middle class. Abhijit Banerjee and Esther Duflo, two of the rockstars in the field of evaluation, argued in the paper that what development requires is "good jobs":

A good job is a steady, well-paid job—a job that allows one the mental space needed to do all those things the middle class does well. This is an idea that economists have often resisted, on the grounds that good jobs may be expensive jobs, and expensive jobs might mean fewer jobs. But if good jobs mean that children grow up in an environment where they are able to make the most of their talents, one might start to think that it may all be worth it.

The idea of a "good job" gets more support from a recent article in Seed Magazine by Sendhil Mullainathan, a professor at Harvard. In Poor Decision Making, he argues:

Private sector finance in Asia

The Asian Development Bank (ADB) has taken a real interest in private sector finance, releasing a publication earlier this year called Private Sector Finance: Catalyzing Private Investment in the Asia and Pacific Region. The ADB argues that a lot of their work revolves around building confidence:

...financial institutions across Asia are awash with liquidity. This is a situation that evokes an underlying problem—the absence of investor confidence. The absence of investor confidence continues to ail most developing economies, as investors remain wary of risks that abound across the region. This is where the strategic role of ADB lies.

They have their work cut out for them. The Institute of International Finance has some harrowing predictions for private capital flows to emerging Asia - a falloff to $64.9 billion in 2009 from $314.8 billion in 2007, a drop of nearly 80% in two years. This places it behind only emerging Europe in percentage terms.

Shovel-ready development 2.0 projects

Folks at the INfluence blog are running an interesting series on "shovel-ready online civic projects": proposals range from an interactive global energy observatory to a news portal for global health. Although their target audience is the Obama administration, the ideas should resonate with the development community at large. The Global Development Commons proposal, for instance, seems to be in line with the d-projects idea we tossed around some time ago.

Corruption and the private sector

I once did an internship at Transparency International (TI-USA, to be exact), so I was pleased to see that their next Global Corruption Report will be on Corruption and the Private Sector. Unfortunately, we'll have to wait until mid-2009 to find out more, since that's when it's slated to be published.