By Tomasz Telma, IFC
If you want to see how quickly the developing world is urbanising—and the problems that this creates—look no further than Istanbul.
In 1990, Turkey’s commercial capital was home to about 6.5m people. By 2014, that number had more than doubled to 16m, creating an urban crush that has sparked everything from blackouts to 2 am traffic jams.
But Istanbul is far from alone. Its struggles echo those of many cities in the developing world, where a massive urban migration has stretched local infrastructure to a breaking point, entrenching poverty and driving up greenhouse gas emissions. Read more
September’s United Nations Summit for Refugees and Migrants at the General Assembly won pledges to increase official funding and resettlement to improve on 2015’s dismal record, when just over half of its appeal and one-tenth of slots were covered. Countries also endorsed preparation of a comprehensive medium-term plan detailing international community priorities and responsibilities in future emergencies.
However, the greatest breakthrough could be represented by private sector groups that organized their own support around the event, including the UN Global Compact for businesses dedicated to the Sustainable Development Goals, and President Barack Obama’s White House Call to Action, which drew initial commitments from 50 companies of hundreds of millions of dollars and innovative solutions to economic and practical challenges. Read more
It would be easy to become depressed about the outlook for climate policy. After all, the topic barely warranted a mention during the recent US election, except for occasional disparaging remarks from the now president-elect. But at this week’s UN climate conference in Marrakesh, delegates have attempted to build on the success of last year’s event in Paris, which delivered a watershed moment in the form of a long overdue agreement on emissions. This year’s conference could be remembered for an equally enduring landmark if the parties choose to accelerate a quiet revolution that is radically reshaping energy systems around the world.
Globally, 2.2bn people have no access to electricity or endure highly unreliable service and rely instead on a toxic mix of kerosene, paraffin, candles and wood. For a third of the world’s population energy is dangerous, erratic and ruinously expensive. Lighting can cost a poor household more than a hundred times what it does in rich countries. Some 4.3m people die each year from the effects of pollution from cooking alone. Read more
Latin America is experiencing its worst economic growth — projected to be negative this year – since the lost decade of the 1980s. At this crucial time, the United States is turning its back and stepping backward from Latin America while China takes further steps forward in its economic relations with the region.
President elect Trump has pledged to walk away from the Trans-Pacific Partnership (TPP) and the North American Free Trade Agreement (NAFTA), as well as steeply raise tariffs on Mexican manufacturing. He also says he will scrap the Dodd-Frank financial reform bill and engage in questionable fiscal and monetary policies. To top it off, he pledges to deport Mexican and other Latin Americans from the United States and build a wall so they can’t come back. Read more
The ideal financial customer is not who you think. First, she lives on about two dollars a day. Second, she lives in rural Africa, the Middle East, South Asia or Latin America. Finally, she’s never owned a financial account of her own.
What’s ideal about all that? Growth. And digital technology is the key to driving it. Read more
While the US was debating Russian hacking and leaks ahead of its elections, EU leaders met last month to discuss Moscow’s efforts to influence European liberal democracies through misinformation and propaganda. “We don’t have the tools to look at this centrally,” one senior EU diplomat complained, referring to a lack of cooperation between EU intelligence services. The official is right – but in a much deeper sense.
For 25 years, open societies saw themselves as the uncontested winners and expected that the remaining autocracies, with the help of western pro-democracy actors, would be relegated to the dustbin of history. So it is with disbelief that we are facing a thrust reversal. Read more
As the world descends on Morocco for the annual United Nations climate conference, the host nation is championing an unlikely hero: African agriculture.
After launching the ambitious Adaptation of African Agriculture (AAA) initiative in September, the Moroccan government seeks to mobilise $30bn of investment for the sector that is under the most significant threat from climate change, in the region that is the least equipped to deal with it. According to current estimates, the negative effects of climate change are already reducing Africa’s GDP by about 1.4 per cent, and the costs arising from adaptation to climate change are set to reach an annual three per cent of GDP by 2030. A principal victim of this is the agriculture sector, which not only feeds the chronically food-insecure continent, but forms the backbone of its economy and its route out of poverty. Read more
The global chemical industry has long been the best real-time indicator of the global economy. This is partly because of its size, as the third-largest industry in the world after agriculture and energy, but also because of its global and application reach. Every country in the world uses relatively large volumes of chemicals, and their applications cover virtually all sectors of the economy, from plastics, energy and agriculture to pharmaceuticals, detergents and textiles.
The first chart confirms the position, showing the latest IMF data for global GDP versus the American Chemistry Council’s (ACC) data for global chemical Capacity Utilisation (CU%) since 1988, in terms of percentage change from the previous year. Read more
By Mouayed Makhlouf, IFC
Look out across the Middle East and North Africa (MENA), and you’ll see a rising tide of youth unemployment. In fact, MENA has the highest rate of official unemployment of any region in the world, averaging at around 11 per cent.
Those are sobering numbers – and a sign that the region hasn’t done enough to create opportunities for its young people. But unemployment in the Middle East and North Africa doesn’t need to be that high.
The region has a large number of companies, many in up-and-coming industries like information technology or logistics, which need workers. Yet job seekers just don’t have the technical skills that employers are looking for, causing many positions to remain unfilled. Read more
Amid heated national debates on immigration in Europe and the US, economic research is increasingly showing that migration is good both for countries of origin and for countries of destination, and for the global economy. But crucially missing from the current debate is how migration, when increasingly driven by man-made calamities, is sweeping under the carpet underlying problems of environmental destruction, overpopulation and joblessness. While favouring migration on grounds of overall economic well-being, the top priority must be to address these contributing factors.
Consider first the global balance on migration. Some 250m people — 3 per cent of the global population — are migrants, of which 20m are refugees fleeing armed conflicts and persecution, and escaping poverty and, increasingly, the effects of natural disasters. The US, Russia, Germany, Saudi Arabia, UK and India are in the top 10 destinations in terms of numbers of arrivals. Migration helps to lower unemployment rates at home and raises remittances, which are vital economic pillars in many economies such as Bangladesh, El Salvador, Nepal and the Philippines. In 2015, the remittances of overseas workers to developing countries amounted to nearly $450bn, three times official development assistance going to the developing world. Read more
We had incorporated a much better short-term outlook for emerging markets in our EM trade recommendations since the second quarter of this year, essentially on the back of a few important developments.
Firstly, the exhaustion in the USD cycle, particularly supported by the market’s perception of a more tentative US Federal Reserve. Indeed, as highlighted by our team on previous occasions, differently from the period 2013-15, we have been trading “policy convergence in G3″, rather than “policy divergence”. This fundamentally reduced the momentum in the USD bullish cycle seen in the previous years. Read more
We now know that the UK will trigger Article 50 of the Lisbon Treaty by the end of March 2017, giving the country two years to negotiate its exit from the European Union. But while most pundits have focused on the UK’s future policies regarding the EU, the UK must think seriously about how to use the opportunity of Brexit to reconsider its trading relationships with Asia, the world’s fastest-growing region.
Asia is a bright spot in a fragile world economy. While advanced economies are projected to grow at an anaemic 1.4 per cent this year, developing countries in Asia continue to grow at 5.7 per cent, with India leading the way at an impressive 7.4 per cent clip. What’s more, the region is home to a growing consumption-oriented middle class, which will reach over 2bn people by 2030. Read more
The globally-adopted target to double the productivity of small-scale farmers, set by the United Nations’ Sustainable Development Goals last year, remains out of reach for most emerging markets. That is according to a new report by the Global Harvest Initiative (GHI) released at the Borlaug Dialogue in Iowa this week. This raises the question: how will we feed the projected 9.7bn people that will be on our planet by 2050, when more than half of them will live in low and middle-income countries?
The GHI defines productivity as a measure of output per unit of input. Our analysis shows that global agricultural productivity must increase by 1.75 per cent annually to meet demand. While the global average rate of productivity growth is only just missing the mark at 1.73 per cent, low-income countries are lagging far behind, with an average annual rate of just 1.3 per cent. Read more
In Economics 101 we teach students that social “bads” should be taxed and social “goods” should be subsidised. When it comes to jobs, however, this principle is observed in the breach.
In addition to paying taxes on their incomes, as well as on the goods and services they buy on the market, workers and their employers also pay social security, also known as payroll taxes on their salaries. Read more
The election of Antonio Guterres as the next secretary-general of the United Nations looks, on the surface of it, like business as usual. A group of ageing men has chosen another ageing man to lead the world for the next four years. In fact, there are grounds for thinking that something significant and positive may have changed in the way the UN works.
Guterres is the first former head of government to have been given the job. Previous holders have all been mid-ranking ministers or career diplomats rather than senior political leaders. The big powers have been happy to keep it that way because they are jealous of their prerogatives and don’t want the person running the UN to have too many ideas of their own. In the words of one popular quip, they want a secretary, not a general. Read more
By Amal-Lee Amin, Inter-American Development Bank
Four years ahead of schedule, the Paris climate change agreement is expected to enter into force next month. Latin American and Caribbean countries played a major role in the diplomatic push to secure the agreement and are now making progress on ratifying it.
As of today, over a dozen countries from the region have also ratified – including its largest emitters, Brazil and Mexico, and also some of its smallest and most vulnerable, Barbados and Belize.
Yet ratification is only an initial step towards implementation. Fortunately, the region has made progress on designing the policies and institutions to implement the agreement. Peru, Brazil, Mexico and Costa Rica were among the first developing countries to put forward voluntary emission reduction pledges starting in 2008. Read more
By Simon Currie and Laura Kiwelu, Norton Rose Fulbright
Harnessing abundant and free solar energy has long been regarded as the obvious solution to Africa’s persistently low electrification rates. After a sluggish start due to unproven technology and high capital costs, we are now witnessing a solar revolution which will transform Africa’s energy landscape over the next decade.
In February 2015 the first solar photovoltaic (or PV) grid connected plant in Africa outside of South Africa was inaugurated at the Agahozo-Shalom Youth Village in Rwanda, a refuge for those orphaned during and after the 1994 genocide.
With a layout resembling the Africa continent, its ramifications have spread far beyond the 8.5MW it exports to the grid, attracting visitors such as Bono and members of the US Senate. In Africa the usual development period for power plants is nine years from inception. Yet this project was generating power barely two years after completion of the feasibility study. Read more
The Amazon rainforest harbours about 10-15 per cent of all the world’s biodiversity on land and stores an estimated 150-200bn tons of carbon. Its rainfall generates approximately 15 per cent of the fresh water that flows into the Earth’s oceans. The people who live in the Amazon or on its borders include so many ethnic groups and speak so many languages that the region is one of the most culturally diverse places on the planet.
It is the last place you would expect an industrial revolution to take place. Read more
By Chris Humphrey, Overseas Development Institute
As officials prepare to fly to Washington for the IMF and World Bank’s 2016 fall Annual Meetings, the financial capacity of the World Bank and other multilateral development banks (MDBs) will be at the forefront of their thoughts.
The two topics of the October 8 Development Committee meeting — proposed changes to World Bank capital structure and a vision for how the Bank can remain relevant in the next 15 years — both revolve around the Bank’s financial resources.
Governments around the world are grappling with how to meet the July 2015 UN Conference on Financing for Development’s call to move from “billions to trillions” of investing to put our planet on an environmentally and socially sustainable growth path. Read more
Tourists steer clear of Brazil, Russia, India and Nigeria because of onerous visa requirements, EM Squared reported last week. But even with easy tourist visas in place, these emerging market giants won’t reach their full potential. The real key lies in enhancing the ease of doing business and developing adequate infrastructure.
Visa policies are certainly a real barrier to tourist arrivals. No matter how beautiful or intriguing your country is as a tourist destination, if you make it too complicated for tourists to visit, they will stay away. That problem is not limited to emerging markets. A few years ago, US Travel Association estimated that the US lost the equivalent of 467,000 jobs due to the difficulty for citizens of primarily Brazil, India and China to obtain a visa. Read more