PSD Blog - The World Bank Group

Coke vs. kvas

I suppose after the attention it got with the Big Mac Index, the Economist couldn't help but continue to rely on mass-produced food items as economic indices. In this week's Economist, there's an article that purports that Coke can serve as an index of happiness. In this case, the analysis is restricted to Africa. The Economist argues that "[a]t a macro-level, when Coke fails, the country whose market it is trying to penetrate usually fails too." By this measure, it predicts a bright future for Africa:

...if Coca-Cola's predications are anything to go by, Africa's future is mostly bright. The company expects sales in Africa to grow by an annual 10-13% over the next few years.

If we were to extend this index to other parts of the world, we'd find one country experiencing a troubling trend - Russia.

More cell phones, better grain prices

We already know that cell phone technology has enabled lots of people in remote areas to access bank accounts and government services. But here is a new one: a recent paper creates a model that predicts that cell phones in Niger will lead to a reduction in price dispersion. This would be true since cell phones enable grain traders to perform searches for better prices in areas where it would otherwise be too costly to search.

Interested? Register online for a discussion with the author held by the Center for Global Development in Washington, D.C.

Development 2.0, the book

This book from Brookings, which I just ordered, promises to be a very interesting read.

Is there life after oil?

In light of a record labor force growth in parts of the Middle East, some question the ability of Arab countries to accommodate this demographic bulge and create enough jobs for the population.

Haward Pack and Marcus Noland – the authors of "The Arab Economies in a Changing World" - argue that relying oil hefty revenues alone won't solve the problem.

Becoming more globally competitive is the way for the future, they say, but it won't be easy given China's established dominance in the manufacturing and India's in the services industry and the region's overall difficult business climate.

A sign of things to come?

Earlier this week IBM and Nokia let go of 31 "eco-patents" and released them to the public. By doing so, the technology giants hope to tap into the wisdom of the crowds. This very web 2.0 move is a sign of their recognition that when it comes to complex issues, such as spurring innovation or identify new business opportunities in the area of clean technologies, the best knowledge may well reside outside their organizational boundaries.

Also recently McKinsey added its voice to the choir of the wikinomics prophets and included "distributing cocreation" and "using consumers as innovators" among the eight emerging trends to watch in business technology. The global consulting firm predicted that "in the US economy alone roughly 12 percent of all labor activity could be transformed by more distributed and networked forms of innovation."

Intuitively, the development sector should be at the avant-garde of the adoption of openness, peering and sharing - the cornerstones of the web 2.0 era. And yet, ironically, the private sector seems to be ahead of the game.

Democratizing entry

Who benefits most from financial liberalization - incumbents or new entrants? A recent study of the U.S. branching deregulation from the mid-70s to the mid-90s suggests a differentiated answer.

Consistent with the hypothesis that small firms were the ones that benefited most from financial liberalization, branch deregulation fostered entry of start-ups more than the expansion of existing enterprises, especially among establishments with fewer than 20 employees.  However, there was also a significant increase in business failures, again concentrated among small start-ups.

Liberalization seemed to have increased churning and creative destruction – and many entrants did not survive to challenge the incumbents.

World's largest untapped consumer segment

With a monthly income varing from $63 and $700, many of them use "branded shampoos and detergents regularly, and they sometimes indulge in a bar of chocolate or bottle of perfume.  A good number own televisions, refrigerators, and DVD players." 

Known as the "next billion," these consumers - who spend over $1 trillion a year - can't "afford to make mistakes" and will "carefully compare [products] functional, technical, and emotional benefits."

BCG has five tips for companies on how to reach this group:

Will Africa miss all MDGs?

It seems more and more likely each year that Sub-Saharan Africa will fail to reach any of the MDGs by 2015.  But it won't be the region's fault, says Bill Easterly in his new paper, but rather of those who set these goals.

Emerging markets' top challengers

In a new study the Boston Consulting Group warns established industry leaders against the competition from emerging markets. Since 2004 the 100 New Global Challengers grew their revenues three times faster than the S&P 500 and now, says David Michael, the report's co-author, they will become potential acquirers:

Never before have so many potential competitors and customers arisen so quickly on a global scale. Moreover, the challengers have completely different approaches to competition, taking advantage of their bases in emerging markets. Many established industry leaders are frankly unprepared for these new types of competitors

The challengers brought over $1.2 trillion in total revenues in 2006. The report predicts that their combined revenues will reach $3.3 trillion by 2010 and $11.8 trillion by 2015.

Development 2.0: a recipe for the UN

What opportunities are opening up for the UN (and, one might add, the World Bank) in the web 2.0 era? What is the long tail of human rights? What is the potential of crowdsoucing for development?

An inspiring post from the Internet Artizans blog has some suggestions. While the UN is thinking about it, the latest web 2.0 platform for development has been launched. For budding social enterpreneurs, more Development 2.0 ideas can be found here.

Jeffrey Sachs wants another Green Revolution

This past year, food prices have […] skyrocketed, causing hardships among the poor and large shifts in income between countries and between rural and urban areas.

The most basic reason for the rise in natural resource prices is strong growth, especially in China and India, which is hitting against the physical limits of land, timber, oil and gas reserves, and water supplies.

There is an urgent imperative to raise food productivity in poor countries, especially in Africa, which needs its own "Green Revolution" to double or tipple its food production in the coming few years. Otherwise, the world's extreme poor will be hardest hit by the combination of rising world food prices and long-term climate change.

From the Daily Star [subscription required].

Predicting energy use in China and India

The International Energy Agency (IEA) released its World Energy Outlook 2007. The report predicts that the world's demand for energy will increase by over 50 percent by 2030.

Burning of coal, as the cheapest and most secure energy substitute, will see a return – rising over 70 percent in the 25 year period. The IEA projects that China and India will account for 80 percent of coal consumption.

Bad news for the poorest of the poor

The authors of a new report at the International Food Policy Research Institute estimate that the world will reach the first MDG (halving the proportion of people living on less than $1 a day and suffering from hunger) by 2015. The bad news is that the ultrapoor – those surviving on less than $0.54 a day - are the most likely to remain among at least 800 million people still in poverty by 2015.

The report points to the three main poverty traps: inability to invest in education; limited access to credit for those with few assets; and reduced productivity due to malnutrition. 

Three-quarters out of 162 million untrapoor today live in Sub-Saharan Africa.

Better times for Africa in 2008

The IMF's World Economic Outlook forecasts a 6.8 percent growth for the continent in 2008. Up from 6.1 percent in 2007, it's a performance not seen in the region since the 1970s. Notably, not all growth was attributed to rising commodity prices:

The combination of more open economies in a benign external environment, together with improved and more consistent policy reforms to strengthen the business environment and official actions to reduce debt burdens has allowed African countries to attract rising private capital inflows as well as benefit from "some step-up" in aid inflows and remittances.

OECD sizes up India for the first time

OECD released its first economic survey of the world's third largest economy.

The report, which calls for a labor market and tax system reform, also recommends changes to improve infrastructure and education. The Doing Business report ranked India 120 among 178 countries on the overall ease of doing business.

According to OECD, India's target of reaching 10 percent annual GDP growth rate, from 7.5 currently, is achievable but contingent upon continued reforms.

Fuels vs. food

Former Senate Majority Leader Tom Daschle takes on Ford Runge and Benjamin Senauer's claim that biofuels will exacerbate world hunger:

Despite the authors' allegations, the facts are clear: U.S. corn is used to feed mostly animals, not people; converting the starch from a portion of the U.S. corn crop into biofuels is an efficient way to reduce the United States' dangerous dependence on imported oil; and the recent firming of grain prices in the United States -- and therefore the world -- will help, not hurt, farmers in food-deficit nations.

Can regulation be worse than minimum wage and labor unions?

Both florists and turtle farmers require occupational license in Louisiana and the state of Maryland mandates licensing for fortune tellers. Adam Summers from the Reason Foundation, estimates in his new report the cost of burdensome regulation in the U.S. at nearly $40billion per year.

Occupation licensing has a significant impact on the labor market, yet it receives very little attention. During the 1950s, about 4.5 percent of the workforce needed to obtain a license to work. That figure has grown to over 20 percent today.

David Kaplan and Enrique Seira have looked at the other side of the story.

FDI in 2011

The Economist Intelligence Unit together with the Columbia Program on International Investment released the World Investment Prospects to 2011 which forecasts FDI flows for 82 countries over the next five years. Eight out of top twenty recipient countries will be in emerging-markets.

The report focuses on political risk, and Jeffrey Sachs analyzes ways to address growing risks in the energy sector.

The graph shows predicted inflows to Asia + China:

Winning hearts and minds of Indian workers

The days when Western corporations could rely on their reputation alone to attract top local talent are gone. In 2006 in India three out of four companies couldn't meet their recruiting needs and this shortage will reach half a million employees by 2010, predicts McKinsey.

With the demand for qualified staff growing, the best local companies are finding new ways to compete. Some promise free classes, career counseling and multiplex theaters. Others send postcards to workers' parents.

Women and soccer: what have you done for me lately?

The 2010 Fifa World Cup in South Africa will generate the demand for service and tourism industries potentially benefiting local women entrepreneurs. First National Bank promised financial and know-how support.

The question is whether the boom in business activity can be sustained beyond the games.

China builds Africa

Over 800 Chinese companies operate in 49 African countries. They bring capital but many bring also labor. The Economist ponders the impact the importation of Chinese workers may have on development in Africa.

Money: best when left to women

Although conditional cash transfer programs have shown positive effects in many areas, including school enrollment and child health, households' compliance with program conditions is costly for both the households and the programs, which have to monitor their compliance.

A new World Bank study finds that the gender of recipients does make a difference.

Raise your GDP: think forward

Researchers at Harvard say that the extent to which a country encourages and rewards delaying gratification, planning and investing in the future, correlates with its level of wealth and innovativeness, confidence and even happiness.

See how future-oriented is your county - the article is available free only until end of August.

Dirty business on the rise

Money-laundering flows exceed $1 trillion per year, finds a new KPMG survey. Forty-one banks, out of 224, said they were unable to track cross-border transactions.

The report estimates that the cost of compliance with anti-money-laundering (AML) requirements has risen by nearly 60 percent since 2004 – that's 20 percent more than banks had expected. As the expansion into emerging markets and transnational mergers continue, these costs are likely to grow.

Ted Truman estimates that the probability of conviction for money-laundering in the U.S. is at 6.5 percent. The AML veteran adds that even at 10 percent conviction rate, the returns to money launderers are high relative to the risk.

More Development 2.0 daydreaming

As "folksonomy" is voted the most hated web 2.0 buzzword, Andrew Keen blasts the wisdom of the crowds, and a Nigerian politician launches a web 2.0 campaign site, let's add, just for fun, some new entries to our imaginary wish list of start-ups in a Development 2.0 world. After all, as we say in Italian, dreams cost nothing…

• D-projects.org: a web site that aggregates information on all development projects run by international and local NGOs, international agencies and financial institutions, and volunteer organizations. Potential donor interested in Ghana, for example, could compare projects and select the ones to give their money to. Development agencies could use the site to check out who else is working on a specific country or issue before embarking on a new project. Recommendations (Amazon style) by users could help donors make more informed choices and, thanks to word-of-mouth, smaller, but worthy, projects may get increased visibility.

New Europe is growing old

A new World Bank study warns about severe economic consequences of aging in countries in Eastern Europe and the former Soviet Union. According to the co-author Arup Banerji:

No aging country anywhere is as poor as Georgia. With a per capital gross national income of just over $1000, it is set to lose almost a fifth of its population over the next two decades. […] It is this interaction of the three transitions – demographic, economic, and political – that makes the region, and its challenges, unique.

With a poignant title "From Red to Grey," the report paints a dark picture. Between 2000 and 2025 Ukraine’s population will shrink by a quarter; in the same period the number of people aged over 65 will double in Bosnia and, except in Tajikistan, the number of school-age population will decline.

There is hope, but the prescription is unequivocal: more flexible labor laws, lower rates of labor taxation, and an increase of labor participation rates.

Emerging Markets – the bubble again?

The appetite for a piece of pie from emerging markets seems insatiable. Only this year, initial public offerings in the region reached more than $50 billion doubling last year's $25 billion. The soaring demand for assets and a constant capital inflow from overseas have lowered the spreads on developing countries' bonds over U.S. Treasuries to a low of 1.50 percentage points – the lowest since 1997.

What's fuelling this trend? The Herald Tribune writes:

The strongest global expansion in a generation and the ability to borrow at low interest rates in markets like Japan and Switzerland. Those forces are drawing money into economies whose low labor costs and increasingly valuable commodities offer opportunities for higher returns.

Concerns extend well beyond China, which will account for roughly a fifth of the private capital flowing into emerging markets this year. The governor of the central bank, Zhou Xiaochuan, expressed concern on May 6 that a bubble was building in the nation’s stock market, which has already risen more than 80 percent this year.

Sound familiar?

Biofuels starved for private investors

Brazil, which produces half of the world's ethanol, will need $4 billion to triple its production by 2020. Argentina will require $300 million in the next three years to maintain the levels of biodiesel and ethanol mandated in traditional fuels distributed at gas stations.

Latin America as a whole provides nearly 80 percent of all biofuels and has a clear potential for more:

Guatemala, Peru and Colombia, large sugar cane growers in the region, stand to benefit from the new boom in ethanol demand. These three are considered to be very efficient producers, yielding more sugar per acre than Brazil, which in turn is eight times more efficient than U.S. corn-based ethanol producers. Colombia too, as the fifth-largest exporter of palm oil, could become a source for biodiesel.

Force to be reckoned with – India's middle class in 2025

Business Today (subscription required) analyzes the most recent McKinsey report:

An average Indian today can potentially spend double of what he could in 1985; in the next 20 years, he will be able to spend four times what he does now […]. Result: India is expected to emerge as the world’s fifth-largest consumer market by 2025, overtaking countries like Germany and Italy which are currently far ahead.

By 2025, India's middle class is expected to swell almost 12-fold from its current size of 50 million […] people to over 583 million.

Rural areas are slated to receive a slice of the cake too:

The growth rate in annual rural income per household will accelerate from 2.8 per cent over the last two decades to 3.6 per cent over the next two; and rural consumption will reach the level of today’s average urban household by 2018.

This rosy scenario will depend on heavy outlays on infrastructure and education. The Economist notes:

The report notes that spending on education and infrastructure will have to increase to support its analysis. Yet it is still hard to imagine so many hundreds of millions of Indians being educated to a standard befitting middle-income status. Transforming the thousands of rotten schools might prove impossible, even if sufficient money can be found. Given India's relatively weak fiscal position, it perhaps cannot be.

Will connectivity transform development?

"If I were you, I wouldn't be so quick to get rid of my landline phone" said Joel Mokyr at a World Bank Forum 2007. Ethan Zuckerman – the second panelist – wrote his own summary of the event.

Warming War

What do Alaska, Canada, Greenland, Russia and Scandinavia have in common? They all are on the path to win big on global warming. The UK Treasury estimates that as much as 20 percent of GDP from the world economy will be at stake. Read on…

Fin de siècle in aid?

Last week's OECD report showing for the first time since 1997 a decline in global aid, combined with a gradual disillusionment with the Millennium Development Goals and Nancy Birdsall's newest piece on the end of the golden age of aid, can lead one to doubt the future of the aid industry.

In times of uncertainty, it's good to look for things that don't change, such as the debate between Bill Easterly and Jeffrey Sachs. For a representative sample watch Mr. Easterly equate scaling up of aid, to scaling up of failure and read Mr. Sachs' recipe for rapid victories against extreme poverty.

IT for growth - but what about jobs?

IT industry report says computing technology drives worker productivity gains that are three to five times those of other investments.

The famous couple, again

Where is it occurring? Who is benefiting most? Is it sustainable? And what are the implications for the rest of the world? These are the main questions in a freshly published World Bank book on the role of China and India in the global economy.

The question underlying the analysis is very simple. China and India account for 37.5 percent of world population and 6.4 percent of the value of world output and income at current prices and exchange rates; as their per capita production and consumption approach level similar to those of today’s developed economies—a standard to which, broadly speaking, both Giants aspire—major effects on global markets and global commons seem inevitable.

The full text of "Dancing with Giants" is available here.

Vaccines don't sell themselves

Why do we need advanced market commitments for vaccines?

Consider that malaria affects more than 500 million people worldwide, and yet this past summer the Financial Times reported that French drugmaker Sanofi-Aventis faced half the demand it had expected for its anti-malaria compound artesunate. As a result, the company was contemplating destroying up to 10 million tablets of the drug.

That's from a Scientific American article this month on the difficulties of predicting market demand for vaccines in developing countries. If it's so difficult to gauge interest in a malaria drug, no wonder we see such limited attention from big pharma in diseases like river blindness, sleeping sickness, snail fever, and other neglected tropical diseases. (Via Global Health Policy blog)

Two weeks to go...

The Nobel Prize for Economics will be announced on October 9. Greg Mankiw prompted a lively discussion on possible winners when he linked to Thomson Scientific's predictions:

• Jagdish Bhagwati / Avinash Dixit / Paul Krugman
• Dale Jorgenson
• Oliver Hart / Bengt Holmstrom / Oliver Williamson

The Thomson Scientific readers' poll puts the first group ahead with 40% of the vote. Any armchair economists care to hazard a guess?

Update: And Ned Phelps is the winner!

Economists debate financial sector in India and China

The IMF/World Bank Annual Meetings Program of Seminars here in Singapore kicked off Saturday morning with "Opening and Reforming the Financial Sectors in China and India" - a provocative session packed with economic heavy hitters. Not surprisingly, despite probing questions neither Zhou Xiaochuan, Governor of the People's Bank of China, nor Ashok Lahiri, Chief Economic Adviser for the Indian Ministry of Finance, would commit to a timetable for greater exchange rate flexibility. Larry Summers argued that fundamental forces would drive currency appreciation and greater exchange rate flexibility in both countries.  In a call to look at economic history, Summers suggested that it is 10 times more common to abandon a fixed rate regime too late than too early.

Entering the dangerous game of economic predictions, Mr. Summers also suggested that in five years India and China's capital markets would be much more integrated with the world economy, reserve accumulation would no longer be tenable, and both countries would move towards structural current account deficits.

The company of the future

What will tomorrow’s corporate giants look like? The rapid rise of world-beating firms from emerging economies ranging from hi-tech to extractives sectors, is already prompting changes in corporate strategy to stay ahead of the game. Now, a UK-based think tank, Tomorrow’s Company, has teamed with leading firms to launch an inquiry addressing core questions on the future role of business in society. Co-chaired by BP and Infosys and with experts such as John Elkington on the inquiry team it should spark some interesting debate. Will business really take on global challenges? Do you think the framing questions are even the right ones? In a welcome step, the inquiry is asking you to share your views here.

Scenarios: disaster response and the media

Strong Angel III (SA III) is a disaster response event/project/conference going on this week in San Diego. Blogging from the event is Sanjana Hattotuwa from ICT for Peacebuilding. He has several excellent posts up about how technology can/should be used in disasters, such as this one describing an audio interview with Internews regional director Mark Frohardt:

Speaking about new and traditional media, Mark emphasised the importance of disconnected traditional media such as FM radio and newspapers...he also said that we need to look at new and innovative ways to get messages out and in particular mentioned Microsoft FM radio enabled wrist watches (that at presently are first generation, somewhat unreliable for essential communications and not designed for humanitarian aid) that in the future could evolve into devices that could really help first response mechanisms work cohesively and collaboratively.

The title threw me at first (sounds a little too much like the Dark Angel TV show), but the event sounds fascinating. What exactly are they doing in San Diego? Addressing this scenario:

Open-source, collaborative avian flu fighting

Christine Gorman points us to the recently announced Global Pandemic Initiative:

IBM and 20 academic and public health organizations today announced a computer-based, collaborative effort to fight bird flu and other potential emerging disease threats. As part of the effort, IBM will contribute some software elements to the open-source community to help share information and make predictions about how a pandemic will develop and how best to respond to one.

See the IBM press release. IBM’s STEM computer-modeling tool will surely trump the innovative WhereGeorge.com approach.

Information markets for public policy

Bob Hahn and Paul Tetlock have finally released their information markets book. As apposed to most of the research out there, they specifically touch upon public policy implications and potentials. The full book is available online for free. Also see some previous posts about prediction markets and Hahn and Tetlock.

IMF on the economic impact of Avian flu

A new report from the IMF, ‘The Global Economic and Financial Impact of an Avian Flu Pandemic and the Role of the IMF,’ was released yesterday. A snapshot:

Once the pandemic has run its course, economic activity should recover relatively quickly…While it is most likely that a pandemic will be followed by a rapid recovery, resulting in limited overall economic effects, it is possible that a severe pandemic will have a more disruptive impact… A severe pandemic may also lead to a significant but temporary reduction in net capital flows to emerging markets… Aside from sharp changes in asset prices, operational risks constitute the greatest challenge to the global financial system in the event of a severe pandemic.

See a related conference call. Nesbitt Burns also released yesterday their economic update of a potential pandemic outbreak.

Mapping the global future

‘Mapping the Global Future' is the latest unclassified report from the US National Intelligence Council. This forward-looking scenario based report focuses on the contradictions of globalization, the impact of the rise of China and India, and new security risks. More on specific topics below the fold.

More avian flu scenarios

An impressive collection of risk scenarios and business continuity resources from the Global Business Network. Many I had seen before. Some of the best new ones include:

• Bob Horn’s scary worst-case scenario timeline
• Bob's mess-map of interactions between systematic actors
• Maplecroft’s pandemic risk map and movie

Update: A GBN Webconference, Birds, Bugs, and Business: Preparing for Crisis.

"The future we will create…"

That is the theme of TED 2006. A great event with great speakers - as always. Lots of power bloggers are there: Ethan Zukerman, Jamais Cascio and Loic Le Meur. Of course also TEDBlog.

Avian flu: what to expect, how to prepare?

The avian flu that is steadily making its way around the globe will develop into a pandemic that will kill tens of millions, create chaos in companies and send the world economy into a tailspin... Or it won't. That uncertainty represents a huge challenge for governments, corporations and citizens worldwide.

That's Wharton on what companies should expect and how they can prepare for Avian Flu. A good summary of ideas.

Also see: 'An Economist's View of Pandemic Flu', 'An Investor's Guide to Avian Flu', this CBO Report or an economic outlook from the World Bank. For more, the Avian Flu Blog.

Update 1: Also see 'Global Macroeconomic Consequences of Pandemic Influenza' from the Lowy Institute for International Policy.

Update 2: Aon's Avian Influenza Pandemic Resource Guide: Business Preparedness and Recovery Planning.

Predicting climate change

The BBC is promoting climateprediction.net, also known as the biggest climate experiment ever undertaken. The project uses distributed computing (as opposed to one big supercomputer) as a prediction method. Now you can donate your computer’s idle time to science, and even watch your planet's climate on a screensaver.

The upgraded design should provide a more accurate representation of the real world, where heat and gases are continuously exchanged between the atmosphere and the ocean, and should produce more realistic projections of future climate…

No two simulations produce exactly the same results; overall, the project produces a picture of the possible range of outcomes given the present state of scientific knowledge.

The newest version of the 2-year-old project boasts a “fully dynamic ocean”. Initial results should be available in May. Or, you could always donate your PC's time to fight AIDS.

Complexity, emergence and collective wisdom

We often write here about the development potential of prediction markets, virtual worlds, social software and bottom-up approaches. So I found this crash course on complexity, emergence and collective wisdom fascinating. It lead me to Princeton’s Global Consciousness project (finding global correlations in random data), MIT's Open Mind project (which is trying to teach computers common sense), and the Collective Unconsciousness project (uncovering the connection between dreams across the world). via Kottke.

Predicting local economics

The Washington Post has set-up a quasi-prediction market allowing readers to guess about the future of the local D.C. economy. Nice. Will they outperform the experts?

(Not) predicting the future

Human beings who spend their lives studying the state of the world… are poorer forecasters than dart-throwing monkeys.

That’s what Louis Menand took away from Philip Tetlock’s new book (free chapter). He goes on:

People who make prediction their business—people who appear as experts on television, get quoted in newspaper articles, advise governments and businesses, and participate in punditry roundtables—are no better than the rest of us… The accuracy of an expert’s predictions actually has an inverse relationship to his or her self-confidence, renown, and, beyond a certain point, depth of knowledge. People who follow current events by reading the papers and newsmagazines regularly can guess what is likely to happen about as accurately as the specialists whom the papers quote.

Global risks in 2006

The World Economic Forum has released the ‘Global Risks 2006’ report. The four key scenarios they model are a severe oil price shock, influenza pandemic, terrorism and climate change. Notably, see these visual risk matrixes.

They have also set up a free prediction market! I just signed up. And on Friday I will be attending this prediction markets summit.

Tracking bank notes to model Avian Flu risks

Using a popular internet game that traces the travels of dollar bills, scientists have unveiled statistical laws of human travel in the United States, and developed a mathematical description that can be used to model the spread of infectious disease in this country. This model is considered a breakthrough in the field.

Via Science Blog. More on New Scientist and Nature. (tnx to Christopher for the pointer)

Brazil, Russia, India and China in 2050

Dominic Wilson and Roopa Purushothaman of Goldman Sachs dream about where the economies of the BRICS (Brazil, Russia, India, China) will be in 2050. Some projections:

• In less than 40 years, the BRICs economies together could be larger than the G6 in US$ terms. By 2025 they could account for over half the size of the G6 - they are currently worth less than 15%. Of the current G6, only the US and Japan may be among the six largest economies in US$ terms in 2050.
• The largest economies in the world (by GDP) may no longer be the richest (by income per capita), making strategic choices for firms more complex.
• As today’s advanced economies become a shrinking part of the world economy, the accompanying shifts in spending could provide significant opportunities for global companies. Being invested in and involved in the right markets—particularly the right emerging markets—may become an increasingly important strategic choice.

(Ht to ASI.)

What matters for future economic growth?

At the Business Week blog, Economics Unbound, Michael Mandel argues that future economic growth depends most on our ability to develop new energy technologies and on whether there will be a major war.

On the first question, my old colleagues at Shell did some superb work developing energy scenarios to the year 2050.

Scenario planning remains a hot area, even if the pre-millennial futurology bubble has deflated a bit. Check out scenarios for the future of the aid industry here and here, or our reading list on scenarios for the aid industry.

Making Development Work

Interesting piece from Robert Hahn of AEI-Brookings and Paul Tetlock, a finance professor. They argue for two things:

• Contracting out the provision of aid services on a competitive basis. For example, auctioning off the right to collect $5 per successfully vaccinated child.
• The use of information markets to collect information about the likely success of different projects. For instance, an openly traded contract that will pay one cent per child vaccinated in Ethiopia by the end of 2007 will rise and fall in value depending on the market's view of how well the vaccination program is likely to work.

This is in the spirit of 'The Market for Aid', although in that book we argued that there were many ways to harness competition and many ways to get better information. Still, competitive disciplines and good information are what's needed, and they can reinforce each other.

The wisdom of Google

Saw the New Yorker's James Surowiecki yesterday, speaking about his book, The Wisdom of Crowds. He praised the effectiveness of 'prediction markets'. For example, Hewlett Packard (internally) sold assets that paid off depending on how big next quarter's printer sales turned out to be. The engineering, marketing, accounts and sales departments each had their own information and traded using it: the results were more accurate sales forecasts.

Since HP have since stopped this experiment, I asked Surowiecki whether he thought the idea would ever catch on. He admitted that organizations do seem to struggle with delegating this kind of deliberation, but was sure it was gathering momentum and would continue to do so.

Well... it turns out that Google have picked up where HP left off. Now let's get the policy wonks from the development establishment to start making some forecasts about the effectiveness of aid programs... [HT: Marginal Revolution]

More development scenarios

Scenarios seem to be hot, whether they are aiming at 2020, 2025 or beyond.

The World Business Council for Sustainable Development has announced they are close to finishing their project looking at the future of water (2030). Previous WBCSD scenarios include: sustainable technology, biotechnology and energy (2050).

Deutsche Bank recently released their scenarios for globalization (2025) and future global growth prospects (2020), and Shell (2025) has just published their most recent contribution. On the future of aid, see 1 and 2 by Tim (2030) or this reading list.

Still need more?