Sustainability and Disruptions
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Cairo University Cairo, Egypt October 2018
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Sustainability and Disruptions
- 1. Mahmoud Mohieldin Senior Vice President Sustainability and Disruptions Cairo University October 30, 2018 Cairo, Egypt @wbg2030 worldbank.org/sdgs
- 2. The SDGs present a major opportunity for transformation Global development agendas serve as a guide for countries to determine their national development path MDGs (2000-2015) SDGs (2016-2030) Goals/Targets/Indicators 8/21/60 17/169/~230 Priority Areas Human Development Holistic: Economic, Social, Environmental Scope Developing Countries Universal
- 3. (i) economic—helping the low-income countries achieve the SDGs (ii) social—the importance of inclusion and equity (iii) environmental— tackling climate change (iv) governance—the centrality of strong institutions Four dimensions of achieving the SDGs
- 4. Economic Dimensions of Achieving the SDGs 1 Economic effects of lack of access to essential services 2 High levels of debt, especially in low-income countries 3 Prioritizing lower income countries 4 Partnerships are key
- 8. Markets Disruption Solution Capital • Increasing Public Debt (Largest public debt since the 1980s) • Fintech • Crypto-assets • Data; analytics; debt management; outreach • Bali Fintech Agenda • Innovation policy and regulation Trade • TradeTensions US/China • Tech disruption platforms • Resort to WTO and other measures • Invest in HC and DNA Labor • Volatility in Growth • Jobless growth • Fast automation (gig economy) • Inclusive growth policies • Invest in HC, social protection, and resilience
- 9. 9 Change from June 2018 2012-16 2017 2018e 2019f 2020f 2018 2019 World 2.8 3.0 3.0 2.9 2.8 -0.1 -0.1 Advanced economies 1.7 2.3 2.2 2.0 1.6 0.0 0.0 EMDEs 4.8 4.2 4.2 4.3 4.6 -0.3 -0.4 East Asia and Pacific 7.3 6.6 6.3 6.0 6.0 0.0 -0.1 Europe and Central Asia 3.2 4.0 3.1 2.5 2.7 -0.1 -0.6 Latin America and the Caribbean 2.2 0.8 0.7 1.8 2.4 -1.0 -0.5 Middle East and North Africa 3.5 1.2 1.8 1.9 2.7 -1.2 -1.4 South Asia 6.4 6.2 6.9 7.1 7.1 0.0 0.0 Sub-Saharan Africa 4.3 2.5 2.8 3.4 3.6 -0.3 -0.1
- 11. 11 -1.2 -0.8 -0.4 0.0 United States China EMDEs Global 80 90 100 110 Apr May Jun Jul Aug Sep China Other EM7 85 90 95 100 105 Apr May Jun Jul Aug Sep China Other EM7
- 12. 12 Bloomberg; Haver Analytics; World Bank • Left Panel. Inflation is measured by year-on-year change in the personal consumption expenditures (PCE) price index. Both PCE price index and unemployment rate are seasonally adjusted. Dotted lines refer to projections over longer run in the latest FOMC) meeting (in September 2018), based on the central tendency. Last observation is August 2018. Right Panel. (Percent, year-on-year) (Percent of labor force) 3 4 5 6 0 1 2 3 2015 2016 2017 2018 Inflation Unemployment rate (RHS) -1 0 1 2 3 4 2010 2013 2016 2019 2022 United States Euro Area Japan FOMC median
- 13. 13 [CELLRANGE ] [CELLRANGE ] [CELLRANGE ] [CELLRANGE ] [CELLRANGE ] [CELLRANGE ] [CELLRANGE ] [CELLRANGE ] [CELLRANGE ] [CELLRANGE ] [CELLRANGE ] [CELLRANGE ] [CELLRANGE ] [CELLRANGE ] [CELLRANGE ] [CELLRANGE ] [CELLRANGE ] [CELLRANGE ] [CELLRANGE ] [CELLRANGE ] 0 10 20 30 -10 -5 0 5 10 Short-term external debt Current account (CA) balance -16 -12 -8 -4 0 4 EMDEs with current account deficits EMDEs with current account surpluses
- 14. 14 Public Debt in EMs, 2013-18s (percent of GDP)
- 15. 15 EMs: Value of International Bonds Maturing Change in Credit Rating in EMs, 2012-18External Variable Rate Debt
- 16. Risks Materialize FX liquidity measures Decline in growth Decline in capital flows Macro- prudential measures Capital flow measures FX reserve buffers Monetary policy Fiscal policy Implement structural reforms Allow exchange rate depreciation Use targeted interventions Use conventional tools, weighing policy trade-offs Use fiscal stabilization if space available; if not, build space Build-up capital buffers Use swap and FX liquidity measures Ease capital flow regulation Consider temporary restrictions on outflows 16 Financial stability measures Macroeconomic policy measures
- 18. 12 Elements of the Bali Fintech Agenda In response to calls from member countries the IMF and World Bank have developed the “Bali Fintech Agenda.” It brings together key considerations for policymakers and the international community into 12 elements arising from the experience of member countries, including: I. Embrace the promise of fintech. II. Enable new technologies to enhance financial service provision. III. Reinforce competition and commitment to open, free, and contestable markets. IV. Foster fintech to promote financial inclusion and develop financial markets. V. Monitor developments closely to deepen understanding of evolving financial systems. VI. Adapt regulatory framework and supervisory practices for orderly development and stability of the financial system. VII. Safeguard the integrity of financial systems. VIII. Modernize legal frameworks to provide an enabling legal landscape. IX. Ensure the stability of domestic monetary and financial systems. X. Develop robust financial and data infrastructure to sustain fintech benefits. XI. Encourage international cooperation and information-sharing. XII. Enhance collective surveillance of the international monetary and financial system. 18
- 19. Traditional disruptions in Trade • Impacts will not be limited to US and China and will be realized elsewhere • Global income could decline by up to 1.7% ($1.4 trillion) with losses across all regions. • Global exports could fall by up to 3% ($674 billion), with largest declines in China and the US. • Concerns regarding second round effects and intensification through investment and market sentiment channels 19 Source: Impacts on Global Trade and Income of Current Trade Disputes. Caroline Freund et al. World Bank Macroeconomics, Trade and Investment Practice Note. July 2018. Number 2. http://documents.worldbank.org/curated/en/685941532023153019/pdf/128644-MTI-Practice-Note-2-Final-3.pdf
- 22. Changes in industrial relations Source: Haskel, Jonathan, and Stian Westlake. “The Rise of the Intangible Economy.” Capitalism without Capital: the Rise of the Intangible Economy, Princeton University Press, 2018.
- 23. Boundaries of the firm Source: WDR 2019
- 24. Scenarios of workers replacing robots… and the history of man vs. machine Elizabeth I Died 1603 Joseph Jacquard Died 1834 Santana of Mexico Died 1876 “The summary of economic science” Published 1913 Luddites 1811-16
- 25. Demand for skills 47% of jobs in the US will disappear in the next 25 years, according to Oxford University Source: Presentation by Ben Pring, The Future of Labor & Work in a Post Bretton Woods World, September 2018 Source: 21 Jobs of the Future: A Guide to Getting – and Staying – Employed over the next 10 Years, Center for the Future of Work
- 26. 26 Financial stress Trade tensions Policy uncertainty Geopolitical risks Slower potential growth
- 27. Invest in resilience (incl. social protection) Invest in infrastructureInvest in human capital Enablers Achieving the SDGs Finance Data STI Harnessing the impact of technological changes requires a comprehensive policy framework
- 28. Investing in Human Capital Three main indicators, reflecting building blocks of the human capital: 1. Survival – Will kids born today survive to school age? 2. School – How much school will they complete and how much will they learn? 3. Health – Will kids leave school in good health and be ready for further learning and/or work? “How much human capital will a child born today acquire by the end of secondary school, given the risks to health, education and social protection that prevail in the country where she was born?” The Human Capital Project
- 29. 29
- 30. 30 The Human Capital Index
- 31. Social protection and labor regulation can help manage labor market challenges Investing in Resilience 31 Source: World Bank World Development Report 2019: Changing Nature of Work 31
- 32. Source: SDG Atlas, World Bank, 2018 32 Investing in Resilience 32
- 33. 33 Investing in Digital Infrastructure The digital economy can help achieve the Sustainable Development Goals (SDGs) andWBG’s twin goals DIGITAL ECONOMY Digital Finance Smart Agriculture Digital Government Digital Citizen Digital Private Sector Smart Energy eCommerce Digital Education Digital Health Industry 4.0 Digital Transport Digital Cultur e Digital Infrastructure Digital Skills Digital Entrepreneur Digital Platforms Inclusive Growth Jobs Competitive Economy Efficiency The scale and speed of disruption is affecting traditional sectors. Changing how we collect, store, access, analyze and present data. Improving production techniques to increase efficiency, affordability, and speed. Transforming how we interact with the world and deliver/ receive services. Digital economies require safeguards to ensure robust job markets, and possible downside risks
- 34. How will we enable these investments? Data Finance Implementation
- 36. Data is a Problem, Even in Canada Source: Who and what gets left behind? Assessing Canada’s domestic status on the sustainable development goals, Brookings, 2017 0 5 10 15 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Seventy-eight of 169 SDG targets describe potentially assessable outcomes for Canada Not able to assess Proxy target Canadian national target Quantified SDG target 36
- 37. The key components of financing sustainable development Source: World Bank Group, 2015
- 41. 103 countries have presented VNRs to date during the High- Level Political Forum 8 countries presented more than once
- 43. Localization of Urban Development Kenya: A government funded drought insurance program brings satellite based insurance to Kenyan pastoralists and farmers using mPesa. Indonesia: A program is being implemented to enhance the capacity of local governments to improve efficiency and effectiveness of local public spending. Also implemented the PNPM program: community driven development U.K. Midlands Successful locally owned businesses help develop local markets, create innovation, success and redistribution in a self-reinforcing cycle Colombia:
- 44. The IT revolution has made the centralization vs. decentralization debate irrelevant
- 45. • Overview: SDGs&Her is an online competition for women micro entrepreneurs to show how they are supporting the SDGs through their business operations. • Eligibility: The competition is open to women who own and/or lead microenterprises (1-9 employees; under USD $10,000 loan eligibility OR annual sales under $100,000). • To Enter: Applicants complete a short online template, describing their work and linking their initiative/product to 1 or more SDGs. • Judging: Entries will be screened by a university partner and then judged by an expert panel. Judges will determine the winners based on the impact on the SDGs, vision and purpose, and clarity of the entries. • Prizes: The top winners will be recognized at an event at the margins of the 2019 World Bank Group/IMF Spring Meetings. The stories of the winning women entrepreneur (and many other notable entries) will be shared through partners’ social media and websites. • Deadline: December 31, 2018. To enter click here Encore!
- 46. • Launched in 2014. Youth competition on innovative ways to finance and implement development solutions to help reach the SDGs. • Partnership between the World Bank Group and the Wharton School, amongst others • In 2017 the Ideas for Action (I4A) competition attracted over 700 proposals from 118 countries. • Winning proposals : • Top 10 will be published in a book • Top 3 will participate in the WBG-IMF Annual Meetings • The Wharton School offers top 10 winners training and opportunities to exchange knowledge • Visit the website at http://www.ideas4action.org/; Follow us @Ideas4Action • Call for proposals for the 2018 edition of I4A:Deadline February 28th http://www.ideas4action.org/2018- competition/ Watch video of 2016 winners Encore!!
- 47. Mahmoud Mohieldin Senior VP Thank You worldbankgroup.org/sdgs Follow us on twitter @WBG2030 Mahmoud-Mohieldin on @wbg2030 worldbank.org/sdgs 47
- 48. lends to governments of middle-income and creditworthy low-income countries provides interest-free loans, or credits, and grants to governments of the poorest countries provides loans, equity, and advisory services to stimulate private sector investments in developing countries provides political risk insurance and credit enhancement to investors and lenders to facilitate FDI in emerging economies provides international facilities for conciliation and arbitration of investment disputes 1944 International Bank for Reconstruction and Development (IBRD) 1960 International Development Association (IDA) 1956 International Finance Corporation (IFC) 1988 Multilateral Investment Guarantee Agency (MIGA) 1966 International Center for the Settlement of Investment Disputes (ICSID) The World Bank Group
Hinweis der Redaktion
- 1) And 2) Low-income countries are borrowing more on non-concessional terms, increasing interest service costs.
- Income Inequality Income inequality has become one of the global economy’s greatest challenges. Inequality has been reduced between countries. But not within countries. Reducing inequality, research suggests an important role for public investment in health, education, and social protection systems. The private sector also has a role to play. Gender Inequality The sad reality is that girls and women all over the world continue to face the daily indignities of discrimination, harassment, and too often violence as well. About 90 percent of countries have some legal restriction on women’s economic activity. invest in the SDGs and boost women’s empowerment, which in turn lays the groundwork for broader SDG success.
- The Paris Agreement. Countries committed to reducing carbon emissions—with the goal of stopping global temperatures rising by more than 2 degrees Celsius over pre-industrial levels. This commitment will entail moving toward a zero-carbon global economy over the coming decades. Carbon Pricing. Carbon pricing comes with many advantages. It is easy to administer if done by integrating carbon charges into fuel tax systems. Adaptation to this new normal will also be important. Vulnerable countries will need to invest in areas such as coastal protection and more resilient infrastructure and agriculture
- Good governance is essential. If institutions are weak, the odds of SDG success are severely handicapped. This is why the SDGs call for “effective, accountable and inclusive institutions at all levels.” By undermining trust and delegitimizing institutions, corruption makes it hard for countries to take the collective decisions needed to advance the common good. Successful anti-corruption initiatives are built on institutional reforms that emphasize transparency and accountability—for example, shining a light on all aspects of the government budget. A related problem is the massive extent of tax avoidance and tax evasion. One estimate is that the wealth in offshore financial centers reaches 10 percent of global GDP. This makes it really difficult to finance the SDGs.
- Old vs new disruption (distinguish by color) Old = green; new = orange Capital: Trade: Resort the WTO or the duly constituted dispute settlement bodies of regional trading arrangements to bring disputes regarding other countries’ trading practices and to authorize reciprocation. Renew economic liberalization programs, reducing distortions, such as subsidies, and continue ongoing trade liberalization efforts through multilateral and regional fora. Continue to uphold the multilateral trading system and commitments in regional trade agreements to improve the credibility on the course of future policy. Avoid resorting to non-transparent forms of retaliation outside of the rules-based system, such as non-tariff measures. Minimize policy uncertainty by the timely and clear communication of future changes in trade policy. Labor:
- US trade policy Signs of slowdown Financial markets
- Global trade tensions have worsened and developing countries stand to see depressing investments as global uncertainty grows. US-China tariff escalation could reduce global exports by up to 3% ($674 billion) and global income by up to 1.7% ($1.4 trillion) with losses across all regions. Impact on developing countries: When investor confidence is shaken, these gains are more than offset for all regions by negative income effects. In this scenario, income losses range between 0.9% for South Asia and 1.7% for Europe and Central Asia. Impact on China and US: The biggest declines in incomes are recorded by China and the US, up to 3.5% ($426 billion) and 1.6% ($313 billion), respectively. The sectors most affected include: agriculture, chemicals and transport equipment in the US; and electronic equipment, machinery and other manufacturing in China. Global income declines by up to 1.7% ($1.4 trillion) with losses across all regions. Global exports fall by up to 3% ($674 billion), with largest declines in China and the US. Source: Impacts on Global Trade and Income of Current Trade Disputes. Caroline Freund et al. World Bank Macroeconomics, Trade and Investment Practice Note. July 2018. Number 2. http://documents.worldbank.org/curated/en/685941532023153019/pdf/128644-MTI-Practice-Note-2-Final-3.pdf
- Uber, the world’s largest taxi company Owns no vehicles Facebook, the world’s most popular media owner Creates no content Ali Baba, the world’s most valuable retailer Has no inventory Air bnb, the world’s largest accommodation provider Owns no property
- Human capital alone explains between 10-30% of differences in per capita income across countries Spell out the 21 jobs: High tech low time (blue): Master of Edge Computing; AI_Assisted Healthcare Technician; Cyber City Analyst; Data Detective; Chief Trust Officer; Financial Wellness Coach; Genomic Portfolio Director Low tech low time (green): Bring your own IT facilitator; Man-Machine Teaming Manager; AI Business Development Manager; Ethical Sourcing Manager; Fitness Commitment Counselor; Digital Tailor; Walker/Talker High tech high time (yellow): Augmented Reality Journey Builder; Genetic Diversity Officer Low tech high time (orange): Personal data broker; Highway controller; virtual store Sherpa; Personal memory curator
- HCP is a global effort to accelerate more and better investments in people for greater equity and economic growth. The cost of inaction on human capital development is going up HCP is expected to help create the political space for national leaders to prioritize transformational human capital investments. The Human Capital Project launched the Human Capital Index
- Of the 10 countries that account for two-thirds of the world’s forest cover, only #China's cover has been growing substantially.
- The IT revolution has made the centralization vs. decentralization debate irrelevant
- The stories of the winning women entrepreneurs (and many other notable entries) will be shared through partners’ social media and websites. The initiative was launched at the margins of the IMF-World Bank Group Spring Meetings, in April 2018
- The World Bank Group offers multiple channels and instruments to encourage the private sector to seek opportunities and engage in developing countries. These include: Creating markets and matching opportunities  Building new markets for non-financial firms Promoting investment opportunities for financial institutions Supporting small- and medium-sized enterprises/promoting innovation and high-growth entrepreneurship: SME Lines of Credit Partial Credit Guarantee Schemes Early-Stage Innovation Finance IDA Private Sector Window Advisory services on trade and investment policies, supply chains, and improved financial infrastructure, A global network of business-incubation centers, Investing with the IFC Asset Management Company: Engaging with business leaders and philanthropies: Building relationships to advance common goals