Avoiding death by diesel
One for each lung
Today’s post is by Simon Upton, head of the OECD Environment Directorate, founder and Chair of the Round Table on Sustainable Development, and former New Zealand environment minister.
If I proposed the building of a large industrial enterprise that would lead to the early death of around 40,000 people, I strongly doubt that the idea would survive the evening news. Yet air pollution from diesel-fuelled road transport kills an estimated 40,000 people a year in France – that’s roughly ten times the number of people who die in road accidents. Unlike a large, easy-to-target industrial plant, the culprits are millions of mobile combustion sites that whiz around carrying the very people who would oppose my large plant.
At global, regional and national levels, air pollution poses a major challenge to public health. The OECD’s Environmental Outlook to 2050 projects that between now and 2050, the number of people who die globally from exposure to particulates will more than double from 1.5 million to 3.5 million. Not all of that can be attributed to road transport emissions. But it is a very significant contributor and is getting worse in emerging economies too as rising affluence brings with it increased personal mobility.
Increased mortality also carries a heavy economic cost. That’s obvious just from anecdotes. It cannot be good for Beijing’s economy that significant numbers of highly skilled people want to leave or not come there in the first place because of the risk air pollution poses, particularly to their children who are growing up in a soup of particulate and noxious gases. But these economic costs are quantifiable and they are serious in most developed economies.
One of the tools used to quantify costs is the Valuation of Statistical Life (VSL) which puts a cash value on a human life. Many people don’t like politicians quantifying life or death trade-offs in monetary terms. However, not making such judgments doesn’t avoid the trade-offs – it just hides them from view. An OECD meta-analysis of VSL estimates suggests a figure of €3.5 million per statistical life in the EU27 for example. This is higher than the €1 or €2 million used by the EU Commission in analyses of policies to limit air pollution, and implies that some policies excluded by the EU may in fact be cost-effective.
How could policy interventions be improved so as to reduce air pollution from road transport and improve human health?
First, apply the policy instruments as close as possible to the problem you are trying to tackle. For CO2 emissions, the policy instrument of choice is a tax related to the carbon content of the fuel since CO2 emissions are directly linked with that carbon content. For NOx and other exhaust pipe pollutants, the link with the amount of fuel used is not so direct. The way the vehicle is driven and the type of engine technology is determinant. Similarly, noise and congestion are not directly linked to fuel-use. For all these social costs, the ideal policy instrument is road user charges that vary with the place and time of driving, and with the environmental characteristics of the vehicles.
For local air pollutants, any charging or taxing regime should use real world emissions measures, not artificially optimistic test scenarios. There is a large and widening gap between the emissions standards that countries are imposing and emissions under normal driving conditions. There may have been no real improvement in NOx emissions from diesel vehicles in European countries since the mid-1990s and while there has been some reduction in particulates emissions, there has been an increase in the amount of NO2 from diesel vehicles.
Almost all OECD countries apply much lower tax rates on diesel fuel than on petrol. There is no conceivable environmental justification for this. Diesel is responsible for more local air pollutants such as NOx and PM than gasoline – although volatile organic compound (VOC) emissions from petrol-driven vehicles also can contribute to smog problems in some places. On the CO2 score, diesel is also more polluting, causing higher emissions per litre fuel than petrol. The fact that you can drive further on a litre of diesel than a litre of gasoline means the benefits of the greater fuel efficiency are entirely captured by the private driver. And to the extent that high fuel efficiency makes driving cheaper, there is an incentive to drive further – and there is evidence that this tends to be the case with the result that CO2 emissions are not reduced.
An increasing number of cities apply congestion charges, but nationwide road-charging systems are only used in Switzerland, and only for heavy goods vehicles. Some countries have motorway charging systems for heavy goods vehicles that include environmental components, and France and Italy for instance have infrastructure funding systems for all vehicles on their motorways. Given that coverage is partial, traffic can simply divert to non-charged routes, thus redistributing the environmental load.
If the current patchwork quilt of measures is far from ideal, how in a pragmatic way might it be improved? If a road pricing system is deemed unfeasible for the present, the best approach would be to maintain the current system of fuel taxes but announce the gradual phase-in of a significant increase in tax rates on diesel fuel. After, say, 7-10 years, there would be a significantly higher tax on diesel than on petrol. Such a timeframe would give both car owners and manufacturers time for the stock of vehicles to turn over to reflect the new pollution priorities.
In principle this could meet the bulk of the pollution reduction objectives that worry people. If taxes on motor vehicles were maintained – say for fiscal reasons – then it would make sense to take account of local air pollutants in the calculation of tax rates, as Israel has done.
Finally, any package of measures should involve a revision of emission standards to better reflect real-world driving.
Useful links
Simon Upton was one of the key speakers at the EU’s Green Week conference held in Brussels on 4-7 June
Today’s post is by Moy Eng, Senior Advisor and former Executive Director at the Community School of Music and Arts
Art for Art’s Sake? The Impact of Arts Education is a gift. Whether one is an artist, educator, policy maker, or philanthropic organization, it offers a comprehensive, cogent review of research studies, and identifies both evidence and gaps in our knowledge. It examines the question of whether arts education helps to develop attributes for the workforce in innovation-directed economies, and lays out the next steps for potential research. Perhaps most importantly, the authors remind us that the primary justification of arts education should be in the intrinsic value of the arts and the important habits of mind that they promote.
This study tempers what is at times a highly charged topic. When the question of public subsidy for arts education and its impact arises, assertions about the arts’ role in developing creative, innovative, and more empathetic schoolchildren emerge. Not unlike a heightened interest in the role of arts in economic and community development in the 1980’s and early 1990’s in New York City. Arts advocates would assert its powerful impact on economic development and cite studies regarding its leverage ratios, for every dollar spent on a ticket to an arts event attracted three other dollars. As the issue became more popular and more studies were commissioned, the “artistic dividend” appeared to notably increase and one began to question the genuine leveraging potential and methodology of the economic studies.
The authors of the OECD study look methodically for evidence, and at best a causal relationship, that illustrates the impacts of arts education for schoolchildren. A second prong of the authors’ scrutiny is the question of what, if any, benefits formal arts learning brings to other domains such as mathematics, language, the sciences and social studies. As befits these three respected researchers, especially Ellen Winner - whose work at Harvard University’s Project Zero I’m familiar with -, their collective eye is rigorous and measured in its assessment, laying out the facts and identifying studies which have or have not demonstrated plausible evidence on the question(s) researched. For example:
“Music education strengthens IQ (intelligence quotient), academic performance, word decoding and phonological skills and there is preliminary evidence that music education might facilitate foreign language learning. While there are a number of studies showing a positive impact of music education on visual- spatial reasoning, the sole longitudinal study on this question detected no persistent influence after three years of music, which suggests the need for caution. There is also no evidence that music education has any causal impact on mathematics scores, even though mathematicians may be attracted to music.” Pg 18
As illustrated above, the reader will discover, as I did, that there is strong evidence that arts education has a positive impact on the development of certain selected skills. Yet, there is far too little research on the impact of arts education on outcomes affecting creativity, problem solving, and behavioral and social attributes, such as persistence and motivation.
A second notable aspect is the breadth of the review. I admire the fact that the research team assessed more than 200 studies covering a sixty-year period (1950-2013). They also incorporated the engagement of and feedback from selected OECD staff members and the Center for Educational Research and Innovation (CERI) governing board, as well as attendees at the OECD-France workshop, “Innovation for Education: the Role of Arts and STEM Education”, held in Paris in 2011.
The authors’ research recommendations are a clear call to strengthen our foundational knowledge of the habits of mind that each discipline may engender and their impact on learning outcomes, research on those habits of mind that may transfer to other subjects, and the methodological frameworks through which future research is conducted.
For this long-time “soloist in the choir” on the importance of arts education, I think that Art for Art’s Sake? The Impact of Arts Education is an exceptional new resource. For my policymaker and philanthropic colleagues, I strongly suggest that you read and take note. There appears to be an opportunity for us to collaborate and invest in long overdue and seminal research studies in arts education.
PODCAST
Report co-author Stéphan Vincent-Lancrin talks about Art for Art’s Sake? in French to Anne-Lise Prigent
Report co-author Stéphan Vincent-Lancrin talks about Art for Art’s Sake? in English to Patrick Love
Useful Links
Arts education in innovation-driven societies by report co-authors Stéphan Vincent-Lancrin and Ellen Winner on the educationtoday blog
The impact of immigrants – it’s not what you think
Click to read the report
In the land of tabloid terrors, immigrants loom large. Flick through the pages or online comments of some of the racier newspapers, and you’ll see immigrants being accused of stealing jobs or, if not that, of being workshy and “scrounging benefits”.
Such views may be at the extreme end of the spectrum, but they do seem to reflect a degree of public ambivalence, and even hostility, towards immigrants in a number of OECD countries. Anecdotal evidence is not hard to find. A columnist from The Economist reported this encounter between a British legislator and one of his constituents, Phil: “‘I’m not a racist,’ says Phil, an unemployed resident of the tough Greenwich estate in Ipswich. ‘But we’ve got to do something about them.’”
Surveys offer further evidence: For example, a 2011 study in five European countries and the United States found that at least 40% of respondents in each country regarded immigration as “more of a problem than an opportunity”. More than half the respondents in each country also agreed with the proposition that immigrants were a burden on social services. This sense that immigrants are living off the state appears to be widespread. But is it true?
New research from the OECD indicates that it’s not. In general across OECD countries, the amount that immigrants pay to the state in the form of taxes is more or less balanced by what they get back in benefits. Even where immigrants do have an impact on the public purse – a “fiscal impact” – it amounts to more than 0.5% of GDP in only ten OECD countries, and in those it’s more likely to be positive than negative. In sum, says the report, when it comes to their fiscal impact, “immigrants are pretty much like the rest of the population”.
The extent to which this finding holds true across OECD countries is striking, although there are naturally some variations. Where these exist, they largely reflect the nature of the immigrants who arrive in each country. For example, countries like Australia and New Zealand rely heavily on selective entry, and so attract a lot of relatively young and well-educated immigrants. Other countries, such as in northern Europe, have higher levels of humanitarian immigration, such as refugees and asylum-seekers.
That said, there’s been a general push in many countries in recent years to attract better educated immigrants, in part because of the economic value of their skills but also because such policies attract less public resistance. For example, a survey in the United Kingdom, where resistance to immigration is relatively high, reported that 64% of respondents wanted to reduce immigration of low-skilled workers but only 32% wanted fewer high-skilled immigrants. Indeed, one objection that’s regularly raised to lower-skilled immigrants is the fear that they will live off state benefits.
But, here again, the OECD report offers some perhaps surprising insights. It indicates that low-skilled migrants – like migrants in general – are neither a major drain nor gain on the public purse. Indeed, low-skilled immigrants are less likely to have a negative impact than equivalent locals.
Useful links
International Migration Outlook 2013
OECD Insights: International Migration
Can China feed itself?
It could be the biggest Chinese takeover ever of a U.S. firm. But this deal doesn’t involve Silicon Valley, high-tech widgets or Hollywood stars. Instead, a Chinese firm is proposing to pay a whopping $4.7 billion for a U.S. business that produces … pork.
Shuanghui International’s offer for Smithfield Food has attracted some controversy. One U.S. senator has described it as “concerning”. Others see it more positively: According to the Financial Times, the “deal will help open the Chinese market for US meat producers”.
That’s a growing market. China’s emerging middle class is eating more, and especially more meat, and is increasingly concerned about food safety. But meeting their demands is set to become a bigger challenge as China confronts environmental and demographic issues and the impact of climate change. And that’s part of the reason why Chinese businesses are eyeing up overseas suppliers like Smithfield.
So far, China has been able to meet much of its growing demand itself: Between 1980 and 2011, agricultural output (not all of it food, of course) expanded 4.5 times, thanks in part to increased use of machinery, improved irrigation, and hybrid crops. In parallel, the number of people going hungry has fallen sharply: In 1990, around one in five Chinese was malnourished; today it’s under one in eight. Food security has also improved: In 1978, for example, rural households spent 68% of their income on food; today it’s only around 40%.
Indeed, one – unwanted – marker of China’s success in feeding itself is the rise in overweight and obese people: Between 1991 and 2006, the proportion of overweight people doubled to just under 27%, according to an OECD report.
But, as the latest OECD-FAO Agricultural Outlook explains, maintaining the growth momentum in Chinese agriculture won’t be easy, for several reasons. The first is demographics: China’s countryside faces a double whammy of an ageing population and migration to the cities. In 1992, around 844 million people lived in the Chinese countryside; by 2022, the UN estimates that figure will fall to below 600 million. Not only will the rural population be smaller, it will also be older, meaning there will be fewer skilled workers available to manage increasingly complex farms.
Then there’s land and water, both in short supply. China has only around a quarter of the arable land per person that OECD countries have. Similarly, its water supply per person is only around a quarter the world average. And both these resources are under pressure: More than 40% of China’s arable land is classed as degraded as a result of erosion, salinisation and acidification. Soil contamination is also a concern.
And, of course, there’s climate change: China, like much of the rest of the world, appears to be seeing a rise in extreme weather events. One result is that the country’s variable water supply is becoming even more unpredictable. Droughts in the arid north are likely to become more common, while flooding will become an even more regular feature of life in the more tropical south.
Despite all these pressures, China will probably go on raising its food output. It’s likely to remain essentially self-sufficient for commodities like rice and to remain a net supplier of others – it’s the world’s top exporter of fish.
But in other areas, most notably dairy and meat products, China may rely more on imports. The bid for Smithfield Food could well be an early sign of that. There are other signs, too, of China’s changing food needs: Hong Kong, for example, has had to put a limit on purchases of baby formula to prevent mainland Chinese parents worried by a succession of food safety scares from clearing the city’s shelves. According to the BBC, retailers as far afield as London and Australia have followed suit.
Indeed, China is likely to have an increasing impact on global food markets. On the downside, that could mean a new source of volatility in the world’s food supply. But, as Craig Emerson, Australia’s trade minister pointed out at the OECD Forum, it could also open important new markets: “There’s no doubt that in Asia, and China in particular, as the middle-classes expand, they will want premium agricultural produce … they’re willing to pay a lot for safe, healthy, clean and green produce.”
Useful links
The Food and Agriculture Organisation (FAO)
The OECD’s Chinese-language site – 网站 (中文)
OECD on Weibo – 经合组织微博
World Environment Day: Greening household behaviour
Do you suffer from Lord Henry Wotton syndrome? He’s the chap in Oscar Wilde’s Picture of Dorian Gray who said “To get back my youth I would do anything in the world, except take exercise, get up early, or be respectable”. It’s an attitude we all have to something or other we feel is desirable, but not to the point of making much of an effort. Saving the environment falls into that category for many people, but the good news for the planet is that the OECD has identified a group of people who “believe that sacrifices will be necessary to solve environmental problems”.
These “environmentally motivated” citizens form one of three groups identified in Greening Household Behaviour, based on the Environmental Policy and Individual Behaviour Change (EPIC) survey carried out in 2011 in 12,000 households in 11 OECD countries. The other two groups are the “environmental sceptics” who believe that environmental problems are exaggerated; and the “technological optimists” who believe that the problems are real, but that technological innovations are key to solving them.
You could divide the respondents in various other ways too, by age for example. In six of the eleven countries, older respondents were more likely to agree that their own generation bore significant responsibility for solving environmental problems, and that these problems should not be simply left for future generations.
Since the report is based on a survey, it’s interesting to try to spot differences between what people say they are prepared to do, and what they actually do (and what you do you yourself). Around 60% of respondents for example said they’d be willing to pay more for electricity generated from renewable sources for instance. One that intrigued me was the 45% of people who claimed they always washed clothes in cold water. Everybody I know is part of the 12% who answered “never” to that one, but I live in profligate Paris. How about you? Do you always, often, occasionally or never turn of equipment that has a stand-by function? Look at table 3.12 to see how you compare.
Apart from water and energy, the survey covers transport, waste generation, recycling, and food consumption, the theme of this year’s World Environment Day. The UN chose food to highlight the fact that while 1 in every 7 people in the world go to bed hungry and more than 20,000 children under the age of 5 will die today from hunger, 1.3 billion tonnes of food is wasted every year. This is equivalent to the same amount produced in the whole of sub-Saharan Africa.
We talked about this subject a few years ago on the blog, following the publication of a UK report that estimated that the average household threw away food and drink worth £40 ($65) per month, or around 15% of the shopping budget. Respondents to the Greening Household Behaviour survey report that approximately 10% of food is thrown away. There is a big difference from one country to another, ranging from 6% in France to 14% in Israel and 15% in Korea. Younger respondents report higher levels of food waste. Those concerned with natural resource depletion are less likely to throw food away.
They’re also more likely to buy organic, but here the cross-country differences are even more striking. Australians and Canadians aren’t really willing to pay much more for organic fruit and vegetables (a 5% price increase), while Koreans would accept a 23% hike. The reported willingness-to-pay for meat and poultry that takes animal welfare into account varies from 10% to 20%. Surprisingly (to me at least) the report says that “no significant pattern is found between income and expenditure […] for organic fruit and vegetables nor for meat and poultry labelled as taking animal welfare into account”.
Demand for electricity is another behaviour that doesn’t depend on income levels, but in this case the poor don’t have alternative choices. So without additional policy measures, they’re likely to suffer as a result of higher energy prices. Likewise, water conservation could be improved by according needs-based grants for water efficiency investments, or giving grants to tenants, who often don’t agree to pay to improve a home they don’t own.
How about this household? My colleague Liisa-Maija Harju has been looking at whether the OECD practices what it preaches regarding sustainable buildings, water use and waste management. To mark World Environment Day, OECD Secretary-General Angel Gurria has announced that the Organisation will be introducing a carbon pricing initiative based on an internal “carbon tax” on air travel of €20 per tonne to “reflect the cost of carbon emissions in OECD staff travel [and] encourage management and staff to give greater consideration to environmental aspects in making their travel decisions and arrangements”.
As Douglas Adams says in The Long Dark Tea-Time of the Soul: “It can hardly be a coincidence that no language on earth has ever produced the expression, ‘As pretty as an airport.”
Useful links
Serge Tomasi of OECD’s Development Co-operation Directorate on Putting green growth at the heart of development
This post is from Serge Tomasi, Deputy Director of the OECD Development Co-operation Directorate
Over the past 20 years, the global development landscape has changed dramatically. At the same time, we face unprecedented global challenges and growing instability, with looming financial and economic crises, and growing unemployment, food insecurity, political instability and environmental threats.
In my view, the latter is probably the biggest of our challenges, as it is long term and will have a severe impact on developing countries for several reasons. Environmental degradation is already very costly in developing countries, where the share of national wealth that is embedded in natural assets is much higher than in developed economies. In these countries, already vulnerable groups of people, such as the rural poor, are highly dependant on natural resources. Without policy shifts to limit climate change and address other environmental risks, the pace of rising temperatures and growing water shortages will lead to alarming impacts concentrated in developing countries.
This includes food security problems in poor countries, where a dramatic increase in demand for food is expected by 2050 (by 50-70% in developing countries as a whole and by 100% in LICs). This combined with growing food price volatility could exacerbate already existing food security risks. Energy access and energy security are also pressing challenges for many countries, in particular in sub-Saharan Africa, where more than two-thirds of the population has no access to electricity today. Last but not least, demographic trends – such as rapid urbanisation – point to a need for dramatic increases in investment in new infrastructure. Without policy changes, infrastructure investments run the risk of being locked-in to outdated, polluting transportation and other systems, with large, negative impacts on human health and well-being in developing countries.
On the other hand, the success story of economic growth in a large set of developing countries – mainly in Asia and Latin America – is very impressive. We have learned from this experience that strong economic growth over the long term is critical is we want to dramatically reduce absolute poverty. But we have to learn also from the negative side of these experiences, including the challenges these emerging countries are now facing now with regard to environmental and sustainability.
Over the past few years, the OECD has been promoting a new growth model – a more sustainable and inclusive one. In 2011, an OECD ministerial meeting endorsed the OECD Green Growth Strategy, aiming to boost economic growth while preserving the natural assets on which our well being depends.
Today OECD has launched a new report – Putting Green Growth at the Heart of Development. It puts our expertise in green growth – and the experience of numerous developing countries – at the service of developing country policy makers who are committed to designing and implementing green growth strategies and policies. It recognises that economic growth is a key part of any national poverty reduction strategy, but also shows that environmental protection is a strategic asset in contributing to national wealth and the well-being of current and future generations. it poses the challenge of reconciling economic growth and environmental protection, and gives examples of how this can be effectively done. In short, it makes the case for promoting sustainable growth as a critical element of sustainable development.
As OECD Secretary General Angel Gurria said: “We are working to ensure that sustainable development and inclusive, green growth remain centre- stage in everything we do. We cannot afford to do otherwise.”
Putting Green Growth at the Heart of Development was prepared through intensive joint work with developing countries – mainly low-income countries – and with a wide group of development co-operation partners. It reviews nearly 80 policies and initiatives from 37 developing countries as well as regional green-growth initiatives.
The many examples described in the report present a clear and hopeful message: green growth can generate both wealth and well-being for citizens of current and future generations. The report also examines the trade-offs between short-term demands and longer-term impacts, and the need to make choices that will deliver a more stable and sustainable future while also ensuring immediate gains.
Beyond the national policy agenda, international cooperation can provide essential support to developing countries in managing a transition to green growth. Financing green infrastructure, strengthening access to international markets, boosting trade in green products and services, and promoting technological transfer and cooperation are key.
Useful links
Roads to recovery
It wasn’t long after the financial crisis struck before people began talking about the road to recovery. Many years on, it turns out that there is no such road. Instead, there are roads – several of them – all leading OECD countries back, some more quickly than others, to modest growth.
Among the major OECD economies, the fastest recovery seems to be happening in the United States, according to the latest edition of the OECD Economic Outlook, released today. Revived confidence and repairs to the financial system are driving growth, and the number of people out of work is falling. By the end of next year, the OECD projects, the U.S. will economy will be growing year-on-year by 3.4%.
Taking a rather slower road to recovery is the Euro area, which is projected to see growth of just 1.8% by the end of 2014. That might not seem like much, but it’s an improvement on estimates for growth in the current quarter, which hover around zero. Europe continues to be weighed down by financial concerns and, of course, unemployment, which is still rising.
Here, the contrast with the performance of the U.S. is striking: The Outlook estimates unemployment in this current quarter stands at around 7.5% in the U.S. and 12% in the Euro zone. By the fourth quarter of next year, it projects that the figure for the U.S. will have fallen to 6.7%, while in Europe it will have risen to 12.3%.
Joblessness is less of a concern in Japan – where it’s currently estimated to stand at around 4.2% – but even that low level looks set to improve over the next 18 months as the government enacts substantial economic reform. The Outlook describes this policy shift as “welcome”, but it warns that the task of boosting sustainable growth, beating deflation and tackling the public debt will require a “delicate balancing act”.
Japan isn’t the only OECD country that will have to do some careful manoeuvring. It’s just one of a number of OECD governments that have used very low interest rates and other, more unconventional, measures to stimulate their economies. On the one hand, continuing with those measures indefinitely risks creating bubbles; on the other, ending them suddenly could provide an unwanted economic shock. Again, some delicate footwork will be required.
Nevertheless, and despite several other caveats, this edition of the Outlook offers a modestly upbeat outlook on the global economy, with growth seen as firming both in OECD and other major economies. As OECD Chief Economist Pier Carlo Padoan says in this video, “we remain convinced that there’s light at the end of this tunnel”.
Useful links
OECD Forum 2013: jobs, equality trust
The OECD Forum starting today will bring together around 2000 people in over 20 sessions, but the main question will be how to make sure the economy is a firm foundation on which to build our societies’ goals.
As OECD data on rising inequality show, the benefits of growth do not automatically trickle down to generate more equal societies. The most immediate challenge is to ensure that growth benefits everyone – women, men, children, the elderly – providing not just income, but access to the goods and services such as housing, health care or education vital to personal well-being and development.
That means we need to adopt a new, inclusive approach that looks at the social as well as the economic aspects of growth. “Inclusive growth” is already happening at the level of national economies, with countries linked together by global value chains (GVCs). And not just in the OECD area. One of the most striking features of the 21st century economy is how the economic centre of gravity is shifting towards Asia, and surprisingly for many, Africa, home to six of the world’s ten fastest growing economies in Africa.
These trends make old ideas of development partnerships obsolete. Large emerging economies now have their own international aid programmes. The private sector is funding major global health, education and other projects. Civil society is increasingly shaping policy and not just working in the field.
However, government policy has not always kept up with the deepening and widening of globalisation and the pace it’s happening at. For example, some multinationals may pay as little as 5% in corporate taxes in a given country when smaller businesses are paying up to 30%. But this is perfectly legal, and exploits the fact that tax systems are still essentially nation-based and were designed for the “old” economy.
Even so, public opinion and the media are outraged, especially given the efforts demanded of ordinary citizens to help cut budget deficits, and the suffering caused by austerity programmes in certain countries. There is a feeling that tax is not the only area where businesses are not acting ethically. Banks manipulating interest rates or food manufacturers deceiving consumers about the ingredients in their products destroy confidence and reinforce mistrust. Government responses to these issues are often perceived as too lenient, and encourage the feeling that there is one law for the rich and powerful, another for the rest.
Many are saying that the social contract – the agreement between citizens and their government, defining the rights and duties of each – is now broken. In the face of unprecedented unemployment levels, governments have cut expenditure. As a consequence, more and more people cannot afford health care, and many young people in particular are giving up trying to find jobs or investing in further education. This is a personal tragedy, and it also weakens social cohesion and the future prospects of the economy, given the growing need for workers with new skills.
The ability of advocacy groups like unions to protect core rights and promote social change is in question, especially if they neglect newer forms of informing, mobilising and campaigning around issues such as social media. At the same time, there are doubts as to whether “social media based” movements are anything more than a passive expression of opinion, and whether protest groups that reject the usual structures of leadership and policymaking can stay together long enough to bring about lasting change in the face of opponents organised in a more traditional way.
There is consensus though that access to information and the ability to exploit it will play an increasing role in the economy and society in the future, with both benefits and dangers. Business models and personal behaviour and attitudes are already changing. But once again, policy is not evolving as quickly as the trends and technologies it is supposed to respond to, or even guide. Massive amounts of personal data are being collected, often with little or no consultation or consent, or debate as to who has the right to know what.
The fact that so many of the phenomena being discussed are immaterial (data, intellectual property, the financial system) can blind us to the fact that we still depend on physical, material, resources to live full lives. Beyond the immediate and pressing concerns linked to the situation today, we have to look to the future. Growth will come to a halt if it destroys the very natural bases on which it ultimately depends. And growth as such will not solve our problems if it is not sustainable as well as equitable and inclusive.
The links below are grouped around the main themes of the Forum. Click to read an article presenting the topic itself, and giving access to dozens of articles providing background data, analysis and opinion.
Useful links
Promoting inclusive growth
Rebuilding trust
Fostering sustainability
Africa: Making the most of its natural resources
Made in Africa
Today’s post by Jan Rielaender, an economist at the OECD Development Centre, marks the launch of the African Economic Outlook 2013.
Africa has made tremendous progress over the last 13 years, going from “hopeless” to “aspiring”, in the words of The Economist. Certainly, Africa’s pace of growth has been impressive, averaging 5.1% of GDP per year – much faster than most OECD countries. Some have dismissed this simply as reflecting only the recent boom in natural resource prices. They point to the fact that prices of most commodities – agricultural, mineral and energy – doubled or even tripled over the same period, and warn that Africa’s growth will come to an end once resource prices taper off, as it is happening now.
This viewpoint misses the real story on two counts. First, natural resources and their improved terms of trade contributed only a third of Africa’s growth. That’s quite a lot, but not enough to make Africa’s growth exclusively a resources story. Instead, much of Africa’s success is actually a productivity story. Applying new methods of measurement, the African Economic Outlook 2013 finds that Africa’s labour productivity increased by close to 3% during the 2000s, with almost half this attributable to workers moving to new activities with higher productivity. By contrast, Latin America’s productivity growth was less than 1%.
Second, rather than being the exclusive drivers of growth, Africa’s natural resources are contributing less than they could do. Agricultural commodities are a striking example: 24% of the world’s agricultural land is in Africa, but only 9% of agricultural production. With regards to mining, spending on exploration in Africa has remained below $5 per square kilometre; in Canada, Australia and Latin America the average is $65 per square kilometre.
So the story of Africa’s growth and natural resources is a mixed bag: On the upside, Africa’s growth rests on a much more diversified base than is often assumed. On the downside, Africa failed to make the most of its natural resource wealth during the recent boom. Had it done better, overall growth and the type of structural transformation that can provide more and better jobs would have been higher.
“Hang on,” you might say now. “Isn’t it conventional wisdom that for development to take off a country must leave commodities behind and focus on building factories? Shouldn’t it then be a good thing to leave most resources in the ground?” Not quite. If managed well, natural resources can play a crucial role in transforming economies. This can happen through three channels: diversification, capabilities and revenues.
Diversification, which essentially means the range and variety of products a country exports, is an important driver of growth in developing countries. Given the right conditions, natural resources can be an important source of diversification. Chile, for example, used proceeds from copper to invest in new agricultural commodities, such as salmon, that it previously did not export. Malaysia invested its oil revenues in forestry and palm oil, building very successful industries. Indonesia used oil revenues to supply fertilizer to farmers and develop new crops, building the basis for the country’s green revolution.
Capabilities are the cornerstone of structural transformation. In simple terms, these represent the things a country “can do” – its technological know-how and skills, for example, or the quality of its public services in areas like infrastructure, education and health, and much, much more. Countries with strong and diversified natural resource production have more opportunities to develop their capabilities. Take South Africa, which went from supplying simple tools to its miners to become an internationally competitive supplier to the world’s mining industry. Chile successfully developed local know-how on adapting mining technology to local conditions, while Nigeria has started to build up a supplier industry for its resource sectors.
Capabilities make the link between the production of basic commodities and diversification at large. On average, the more unprocessed commodities a country exports competitively, the more manufactured products it exports competitively. For example, South Africa exported 46 raw commodities competitively in 2005 and 197 manufactured final products in 2010. Angola only exported one commodity (oil) competitively in 2005 and 24 manufactured final products in 2010.
Finally, the third channel – revenues – offers arguably the greatest benefit from extractive industries in the short to medium term. Invested wisely, the proceeds from mining and petroleum production can be used to fund many of the crucial inputs for structural transformation such as education and health, as well as infrastructure and strong public services.
So, instead of putting natural resources aside, African countries should look to them for their strengths and the opportunities they offer to create a diversified economy.
Useful links
What did you learn in school today?
.jpg)
The happiest days of your life, they said
It’s probably safe to say that, in absolute terms, more children are now in school than at any other time in human history. Not just that, it’s also likely that a greater proportion of children – both boys and girls – are in school than ever before.
In Sub-Saharan Africa, for example, just under three in five children of primary school age attended class at the turn of the century; today, that figure is above three in four, according to Unesco. Similarly, back in 1999 in the world’s developing countries, there were around ten boys in school for every nine girls; today, the ratio is close to parity. All this represents good progress for the Millennium Development Goals on education.
But here’s a question: What are all those children actually learning in school? Regrettably, in many developing countries the answer looks to be not much or, at least, not enough. It’s become increasingly clear that the progress developing countries are making in improving the quantity of education is not being matched by a rise in quality. The problem was described in stark terms last year by the Africa Progress Panel, which stated that many children in African schools “are receiving an education of such abysmal quality that they are learning very little. Far from accumulating ‘21st century skills’, millions of Africa’s children are emerging from primary school lacking basic literacy and numeracy.”
The problem is not confined to Africa. Despite a big rise in enrolments and numerous government initiatives, India, too, has many failing schools, as writer Rakesh Mani found when he arrived to teach at a school in Mumbai: “Only a handful of my third-grade students could read first-grade books, and almost all struggled with elementary arithmetic,” he wrote recently. “Despite this being an English-language school, few teachers – and fewer students – could speak the language at all. Indeed, most of my students were unable to recognize basic alphabets or perform simple addition.” The quality deficit in Indian education was also highlighted in an OECD report a couple of years ago, which noted that “barely over one-half of fifth-grade [rural] students demonstrated a sound ability to read a second-grade text”.
The reasons for all this are no mystery. In many developing countries, teachers are in short supply, while those who are available have often received little training and may rely on outdated techniques like rote learning. Teacher absenteeism can also be an issue. On the student side, malnourishment and sickness can hold back children’s learning – it’s hard to study when your stomach is growling. Families may also struggle to pay school fees and may take children – especially girls – out of school before they finish their education or for parts of the year.
So, if we’re to measure progress on education, it’s clearly not enough to look just at enrolment rates. We need also to examine quality in education – an idea that’s emerging strongly in the Post-2015 process of creating a new round of global development goals.
Of course, a number of models for assessing how well students are doing in school already exist, including the OECD’s PISA programme, which examines the performance of 15-year-old students in over 70 countries every three years. While most of the focus has been on the performance of developed countries in PISA, a growing number of developing countries have also been taking part in recent rounds of the three-yearly assessment as well as in follow-up rounds.
PISA’s role in development could be extended still further: “With increased numbers of developing countries participating in the PISA 2015 cycle this could potentially serve as a baseline for measuring progress by developing countries, including some of the least developed, towards a post-2015 education goal,” a recent paper from the OECD notes. Indeed, work has already begun at the OECD to make PISA more relevant to developing countries, with the aim – as a recent blog post noted – of ensuring the programme offers “developing countries more tailored and relevant policy analysis and insights”.
Useful links
