Shifting Wealth and What It Means for Development Policyunctad.org/Sections/wcmu/docs/ciimem2_3rd_mold.pdf · Perspectives on Global Development Shifting Wealth and What It Means

Multi-year Expert Meeting on

International Cooperation: South–South Cooperation and Regional Integration

23–25 February 2011

Shifting Wealth and What It Means for Development

Policy

by Mr. Andrew Mold

Senior Economist, OECD

Perspectives Perspectives on Global Development on Global Development

Shifting Wealth and What It Means for Development Policy

UNCTAD, Geneva February 23, 2011

2

An Inclusive Space for Dialogue

Non-OECD Countries2010 – 13 membres

OECD Countries2010 - 26 membres

Morocco

Mauritius

Romania

Viêt-Nam

Colombia

Costa Rica

DominicanRepublic

Egypt

South Africa

India

Thailand

Brazil

Peru

Indonesia

AfDB(Observer)

OECD Development Centre

3

1 Shifting Wealth: Definition

Shifting Wealth: South‐South linkages 3

2 The Macroeconomics of Shifting Wealth

4Shifting Wealth and the Growing Divide within Developing Countries

Outline

5 Shifting Wealth and its Social Dimension

6 Policy Conclusions and Summing Up

4





Outline



5

Emerging and Developing Countries Driving Global Growth since 2000Contribution to world GDP/PPP growth 1990‐2015

Annual global GDP‐PPP growth rate (based on 3‐yr moving average)

0%

1%

2%

3%

4%

5%

6%

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Contribution of advanced economiesContribution of emerging and developing economies

Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth based on IMF World Economic Outlook, 2010, AprilNotes: Data for 2010-2015 based on IMF projections

6

7

8

1990 – A Break with the Past?

9

A New Geography of Growth: The Four-speed World in the 1990s

Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth

The disappointing reality

10

A New Geography of Growth: The Four-speed World in the 2000s


Goodbye Divergence, Hello Convergence?

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Outline



12

1.1. 800 mln 800 mln ‐‐ 1.5 bln workers1.5 bln workers join globalised labour force since late 1980s →low‐skilled wages

2.2. Raw material demand Raw material demand → ↑ commodity prices

3.3. From net debtor to net creditor From net debtor to net creditor → ↓ interest rates & ↑ liquidity

Shifting Wealth: Impact on Global Wages, Prices and Interest Rates

13

Developing Countries Now Hold Most Foreign Exchange Reserves

Source: IMF International Financial Statistics, Sept 2010

14

Developing Economies no Longer Perceived as High risk/Low return

0%

20%

40%

60%

80%

100%

120%19

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

15

Advanced economies Emerging and developing economies

Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth based on IMF World Economic Outlook, 2010, April

Public Debt as % of GDP

15

From Net Debtor to Net Creditor Positions

Source: IMF World Economic Outlook 2010, April

16

The Chinese and Indian Middle Class will Drive Global Demand

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

Share of global middle class consumption

17





Outline



18

The Increasing Importance of the South to the South

• Trade

• Foreign Direct Investment

• Aid

19

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

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

21

Potential Gains from S-S Trade Liberalisation are twice than N-S


22

Growth Through Cheaper Imports for Capital Goods?

Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth based on United Nations (2010)

Chinese exports of capital goods to low and middle-income countries

23

Shifts in Relative Prices for US Imported Goods, 2000-09

Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth based on US Department of Labour (2010)

% change over the period

24

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 2010

25

The Rise of New Donors

26

26





Outline



27

Shifting Wealth and the Growing Divide within Developing Countries

Why convergence?

→ the ability to absorb technologies and generate new ones throughthe ability to absorb technologies and generate new ones through• Human capital upgrading

• R&D

• FDI and trade

But the technological divide is growingtechnological divide is growing

28

Growth Accounting and the Four-Speed World, 2000s


Contribution to output growth byOutput growth

(average annual growth

rate)

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%

29

The Technological Divide is Growing Between Developing Countries

Source: World Bank (2009).

Patent applications per 100 000 people

30

A Shift in Tertiary Education towards Asia

Note: Calculations based on number of pupils enrolled in tertiary education worldwide regardless of age.Source: UNESCO (2009).

World share

31

Geographical Concentration of R&D Expenditure, 2007

Source: National Science Board (2010).

32





Outline



33

Poverty Fell Dramatically… but Unevenly (mostly in China)Headcount poverty rates

% of population living under USD 1.25 2005 PPP

Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth based on Chen and Ravallion (2008).

34

Poverty reduction 1990-2005 (% population below the poverty line 1.25 USD/day)

34

35

Growth is not a Sufficient Condition for Human Development

The case of Under‐5 Mortality Rate

Region 1990 2008 % change over period

Sub‐Saharan Africa 108 86 ‐20%Middle East and North Africa 57 33 ‐42%South Asia 88 57 ‐35%East Asia and Pacific 41 22 ‐46%Latin America and Caribbean 42 19 ‐55%Central and Eastern Europe and the CIS

42 20 ‐52%

Source: UNICEF (2010)

36

…But Inequality Within Many High-growth Economies Increased

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.

Gini coefficient

37

Shift in Focus from Absolute Poverty to Relative Deprivation

Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth based on OECD (2008) and World Bank (2009).

•Absolute and relative poverty headcount for selected OECD and non-OECD countries (mid-2000s)

* Indicates income rather than consumption measure

38

Scope for Peer-Peer Learning/innovative Redistributive Schemes (CCTs)

Source: World Bank (2009)

39

Scope for Peer-Peer Learning/innovative Redistributive Schemes (CCTs)

Source: World Bank (2009)

40





Outline



41

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

Thank you!

OECD Development Centre

More for information please visitwww.oecd.org/dev/pgd

webnet.oecd.org/pgdexplorer

www.oecd.org

Documents

Shifting Wealth and What It Means for Development Policyunctad.org/Sections/wcmu/docs/ciimem2_3rd_mold.pdf · Perspectives on Global Development Shifting Wealth and What It Means