Shifting Wealth and What It Means for Development Policy

Transcription

1 Multi-year Expert Meeting on International Cooperation: South South Cooperation and Regional Integration February 2011 Shifting Wealth and What It Means for Development Policy by Mr. Andrew Mold Senior Economist, OECD

2 Perspectives on Global Development Shifting Wealth and What It Means for Development Policy UNCTAD, Geneva February 23, 2011

3 An Inclusive Space for Dialogue OECD Development Centre OECD Countries membres Non-OECD Countries membres Egypt Morocco South Africa Mauritius India Romania Thailand Brazil Peru Indonesia Viêt-Nam Colombia Costa Rica Dominican Republic AfDB (Observer) 2

4 Outline 1 Shifting Wealth: Definition 2 The Macroeconomics of Shifting Wealth 3 4 Shifting Wealth: South South linkages Shifting Wealth and the Growing Divide within Developing Countries 5 Shifting Wealth and its Social Dimension 6 Policy Conclusions and Summing Up 3

5 Outline 1 Shifting Wealth: Definition 2 The Macroeconomics of Shifting Wealth 3 4 Shifting Wealth: South South linkages Shifting Wealth and the Growing Divide within Developing Countries 5 Shifting Wealth and its Social Dimension 6 Policy Conclusions and Summing Up 4

6 Emerging and Developing Countries Driving Global Growth since 2000 Contribution to world GDP/PPP growth Annual global GDP PPP growth rate (based on 3 yr moving average) 6% Contribution of advanced economies Contribution of emerging and developing economies 5% 4% 3% 2% 1% 0% Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth based on IMF World Economic Outlook, 2010, April Notes: Data for based on IMF projections 5

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9 A Break with the Past?

10 A New Geography of Growth: The Four-speed World in the 1990s The disappointing reality Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth 9

11 A New Geography of Growth: The Four-speed World in the 2000s Goodbye Divergence, Hello Convergence? Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth 10

12 Outline 1 Shifting Wealth: Definition 2 The Macroeconomics of Shifting Wealth 3 4 Shifting Wealth: South South linkages Shifting Wealth and the Growing Divide within Developing Countries 5 Shifting Wealth and its Social Dimension 6 Policy Conclusions and Summing Up 11

13 Shifting Wealth: Impact on Global Wages, Prices and Interest Rates mln 1.5 bln workers join globalised labour force since late 1980s low skilled wages 2. Raw material demand commodity prices 3. From net debtor to net creditor interest rates & liquidity 12

14 Developing Countries Now Hold Most Foreign Exchange Reserves 13 Source: IMF International Financial Statistics, Sept 2010

15 Developing Economies no Longer Perceived as High risk/low return Public Debt as % of GDP 120% Advanced economies Emerging and developing economies 100% 80% 60% 40% 20% 0% Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth based on IMF World Economic Outlook, 2010, April 14

16 From Net Debtor to Net Creditor Positions Source: IMF World Economic Outlook 2010, April 15

17 The Chinese and Indian Middle Class will Drive Global Demand Share of global middle class consumption 16 Source: Kharas (2010) The Emerging Middle Class in Developing Countries, OECD Development Centre Working Paper No. 285, Projections based on data from the Wolfensohn Center for Development, Brookings Institution

18 Outline 1 Shifting Wealth: Definition 2 The Macroeconomics of Shifting Wealth 3 4 Shifting Wealth: South South linkages Shifting Wealth and the Growing Divide within Developing Countries 5 Shifting Wealth and its Social Dimension 6 Policy Conclusions and Summing Up 17

19 The Increasing Importance of the South to the South Trade Foreign Direct Investment Aid 18

20 Rising Share of South-South Trade on Global Trade Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth based on UNCTAD Handbook of Statistics (2010), excluding transition economies 19

21 Rising Share of South-South Trade on Global Trade Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth based on UNCTAD Handbook of Statistics (2010), excluding transition economies 20

22 Potential Gains from S-S Trade Liberalisation are twice than N-S 21 Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth

23 Growth Through Cheaper Imports for Capital Goods? Chinese exports of capital goods to low and middle-income countries 22 Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth based on United Nations (2010)

24 Shifts in Relative Prices for US Imported Goods, % change over the period Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth based on US Department of Labour (2010) 23

25 Rising Outward Foreign Direct Investment from Emerging Economies Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth based on UNCTAD Foreign Direct Investment database

26 The Rise of New Donors 25 26

27 Outline 1 Shifting Wealth: Definition 2 The Macroeconomics of Shifting Wealth 3 4 Shifting Wealth: South South linkages Shifting Wealth and the Growing Divide within Developing Countries 5 Shifting Wealth and its Social Dimension 6 Policy Conclusions and Summing Up 26

28 Shifting Wealth and the Growing Divide within Developing Countries Why convergence? the ability to absorb technologies and generate new ones through Human capital upgrading R&D FDI and trade But the technological divide is growing 27

29 Growth Accounting and the Four-Speed World, 2000s Output growth (average annual growth rate) Contribution to output growth by TFP growth Physical capital growth Human capital growth Affluent 3.3% 1.1% 1.6% 0.6% Converging 5.7% 2.8% 1.8% 1.1% Struggling 3.1% 0.5% 1.2% 1.4% Poor 3.2% 0.6% 1.2% 1.4% Brazil 3.4% 1.4% 0.7% 1.3% China 9.3% 4.4% 4.4% 0.5% India 7.0% 2.1% 3.7% 1.2% South Africa 4.2% 1.8% 1.7% 0.7% Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth 28

30 The Technological Divide is Growing Between Developing Countries Patent applications per people 29 Source: World Bank (2009).

31 A Shift in Tertiary Education towards Asia World share Note: Calculations based on number of pupils enrolled in tertiary education worldwide regardless of age. Source: UNESCO (2009). 30

32 Geographical Concentration of R&D Expenditure, 2007 Source: National Science Board (2010). 31

33 Outline 1 Shifting Wealth: Definition 2 The Macroeconomics of Shifting Wealth 3 4 Shifting Wealth: South South linkages Shifting Wealth and the Growing Divide within Developing Countries 5 Shifting Wealth and its Social Dimension 6 Policy Conclusions and Summing Up 32

34 Poverty Fell Dramatically but Unevenly (mostly in China) Headcount poverty rates % of population living under USD PPP 33 Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth based on Chen and Ravallion (2008).

35 Poverty reduction (% population below the poverty line 1.25 USD/day) 34 34

36 Growth is not a Sufficient Condition for Human Development The case of Under 5 Mortality Rate Region % change over period Sub Saharan Africa % Middle East and North Africa % South Asia % East Asia and Pacific % Latin America and Caribbean % Central and Eastern Europe and the CIS % Source: UNICEF (2010) 35

37 But Inequality Within Many High-growth Economies Increased Gini coefficient 36 Note: Gini coefficients for income (Brazil) or per capita expenditure (India, China, South Africa) Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth, OECD (2010) for China and World Bank (2009a) for Brazil.

38 Shift in Focus from Absolute Poverty to Relative Deprivation Absolute and relative poverty headcount for selected OECD and non-oecd countries (mid-2000s) * Indicates income rather than consumption measure 37 Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth based on OECD (2008) and World Bank (2009).

39 Scope for Peer-Peer Learning/innovative Redistributive Schemes (CCTs) Source: World Bank (2009) 38

40 Scope for Peer-Peer Learning/innovative Redistributive Schemes (CCTs) 39 Source: World Bank (2009)

41 Outline 1 Shifting Wealth: Definition 2 The Macroeconomics of Shifting Wealth 3 4 Shifting Wealth: South South linkages Shifting Wealth and the Growing Divide within Developing Countries 5 Shifting Wealth and its Social Dimension 6 Policy Conclusions and Summing Up 40

42 Harnessing Better the Shift: The Challenges Exploit the power of peer learning Capitalise on trends regarding South South linkages Deepen S S liberalisation (regional integration, Sao Paulo Round, etc.) Prioritise social policies to address rising intra country inequalities. Move towards effective social protection systems Putting technology transfer back on the agenda Improving inclusiveness of institutions of global governance 41

43 Thank you! OECD Development Centre More for information please visit webnet.oecd.org/pgdexplorer