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May 2011

Social Cohesion

Mario Pezzini's picture

Day two of the 2011 ABCDE conference has just finished and so far, the conference has given me a lot to think about. There seems a growing consensus that high levels of inequality are not conducive to sustained growth and development. At the Development Centre we go beyond this, arguing that societies that are growing rapidly and undergoing significant structural changes could see their growth trajectories compromised unless they put in place policies to help manage the process.

What is less clear is what policies should be employed, and in what order. Given the extensive changes that many countries are experiencing, focusing on inequality or poverty reduction is not enough.  Rapid economic growth may be instrumental to reducing poverty, but if large parts of the population get absorbed into the informal sector for example, then these “non-poor” will remain very vulnerable over time.

Does Competition Make Banking More Dangerous?

Thorsten Beck's picture

Post-Debate Update:

The debate is over, opening statements, rebuttals and closing remarks have attracted lots of comments and the votes been cast and counted. The results show that a (probably not very representative) majority do not think that competition is dangerous for stability, though the reasons for this might vary quite a lot. Some might have been swayed by my argument that it is regulation that makes banking more dangerous – if of the wrong kind. This is also consistent with Ross Levine’s view that the recent crisis "represents the unwillingness of the policy apparatus to adapt to a dynamic, innovating financial system." Understanding the links between competition, regulatory policies and stability is certainly a topic that deserves to be to be explored more – stay tuned for an update over the summer.

Original Post:

What's at the Top of the Agenda for the Financial Sector after the Crisis?

Maria Soledad Martinez Peria's picture

The 2011 Overview Course of Financial Sector Issues took place earlier this month at the World Bank's headquarters in Washington, DC. This annual event is sponsored by the Office of the Chief Economist of Finance and Private Sector Development, and it provides an overview of issues of current importance for policy-makers, researchers, and practitioners working in the financial sector. Speakers included a number of well-known thinkers and researchers on financial sector issues such as Simon Johnson, Ross Levine, and Franklin Allen, and attracted some 70 external participants from central banks, ministries of finance, and bank regulatory agencies representing 45 countries.

The theme of the course this year was Financial Sector Practices and Policies after the 2007-2008 Crisis (view the full agenda). Lectures, case studies, and panel discussions covered a broad spectrum of issues surrounding this theme, such as long-run policy lessons from the financial crisis, the role of the government in the financial sector after the crisis, bank risk management models before and after the crisis, bank resolution mechanisms, building crisis management capabilities, the future of bank regulation, macro-prudential regulation and stress testing banking systems, capital markets and pension systems after the crisis, to mention the main ones. Also, the course looked into longer-term issues related to the development of the financial sector, e.g. remittances, financial inclusion, SME finance, and microfinance.

Food price shocks, food security and potential policy responses

Will Martin's picture

(Summary of parallel session 10 at the ABCDE, Paris)

This session involved the presentation of three papers. The first looked at the importance of high food prices for poverty in developing countries. The second looked at the optimal policies for an individual country using trade policies to insulate its market from price volatility in the world market. And, the third considered the implications of the policies actually undertaken by developing countries.

The first paper presentation showed that high food prices raise poverty substantially, implying that policy makers in developing countries are right to be concerned. The second showed that—for individual countries—an appropriate response to high food prices appears to be use of export restrictions in exporting countries or reductions in import barriers in importing countries. The third showed that most countries actually respond in this way, but that these actions are collectively ineffective in reducing the volatility of domestic prices. What appears to be needed is to identify policies that can more effectively deal with the problem of food price volatility.

Social Protection for Inclusive Growth: A Focus on Sub-Saharan Africa

Giorgia Giovannetti's picture

 ‘Social protection for inclusive development’ is a timely topic. The G20 ‘Seoul Development Consensus (2010)’, identified growth with resilience as a key pillar. Furthermore, the recent prevailing uncertainty (economic, political and environmental) reinforces the needs for measures, such as social protection, to both safeguard as well as promote development. More broadly, a consensus is emerging that social protection is an important instrument in supporting progress towards inclusive growth and the Millennium Development Goals (MDGs), especially in those situations (covariate shocks, imperfect markets) where remittances  and other private safety nets might be insufficient (see Nyarko).

The session Social protection for inclusive growth (based on contributions to the European Report on Development 2010) reviews new generation programmes, emphasising reasons for success and failure. It highlights the features which make social protection possible, affordable and feasible even in low-income countries. Evidence presented shows that social protection programmes can mitigate risks and reduce chronic poverty and vulnerability without producing significant distortions or disincentives (Klasen on South Africa). Besides South Africa and the well known cases of Brazil, Mexico, other recent programmes have been effective in reducing poverty and inequality (cf Table 1 and ERD 2010 for evidence).

What Influences Individual Donations to Disaster Victims?

Anne-Katrin Arnold's picture

We see donation appeals everywhere these days - to help the people in Japan, to help the people in Darfur, to help the people in Haiti. What influences our decision to give? An interesting study comes from British psychologists, who analyzed how individuals respond to donation appeals in the wake of man-made disasters - like war - versus natural disasters. The authors around Hanna Zagefka from Royal Holloway University in London found that natural disasters elicit more donations than those caused by people. Their explanation: people tend to assign some blame to the victims of man-made disaster, while they blame no one for being overrun by a Tsunami.

Podcast: Can We Get All Children in School and Learning by 2020? Harvard interviews Halsey Rogers

Christine Horansky's picture

How we can make the next decade one in which all children, everywhere, are in school and learning? The World Bank's Lead Economist for education, Halsey Rogers, joins the Harvard EdCast from Washington to discuss the new Education Strategy 2020 and a global agenda for learning.

Touching upon the truth during the spring meetings

Guest Blogger's picture

When I first received an invitation for the International Monetary Fund and World Bank Spring Meetings, my friends said I shouldn’t open the e-mail because it was probably a spam. My family said I should check the source of the invitation and investigate the reason behind it before accepting. My tutors said this was weird. It seemed like everyone was skeptical about the fact that these international financial institutions could be genuinely inviting young people to this important event. With a lot of curiosity, I traveled to Washington D.C. hoping to reconcile the puzzling ideas in my head about this meeting and these institutions.