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Challenging global economic conditions, including a combination of low growth, a limited number of jobs, and rising inequality, are fueling the rise of nationalism and populism that are a threat to global cooperation, IMF Managing Director Christine Lagarde said in a speech at CGD.
“The greatest challenge that we are facing now is the risk of the world actually turning its back on global cooperation,” warned Lagarde, “the cooperation that has served us well.”
Speaking at a special CGD event entitled "Redoubling our Resolve for Global Development," Lagarde directly referenced the recent vote by the UK to leave the EU and echoed the current political climate in the US. But her speech, "Doubling Down on Development,"was designed to underscore the importance of global cooperation to help the poorest countries in the world.
Almost one year on from the adoption of the Sustainable Development Goals, she warned, a group of 60 low-income countries “would suffer particularly as a result of that risk [of a breakdown in global cooperation].”
In a CGD podcast recorded after her speech, Lagarde pointed to one immediate effect of the dissatisfaction with globalization and integration amongst people in rich countries: the large post-Brexit drop in the exchange rate of the British pound, she said, has instantly reduced the value of UK development assistance by around $1.9 billion (other CGD colleagues Owen Barder, Michele de Nevers, Matt Collin, and Matt Juden have recently written and spoken about other potential effects).
The head of the IMF, who is also a former French finance minister, told the audience at CGD that she regretted the decision made by British voters. Later, when asked during the podcast if a recession in the UK was now inevitable, she responded that “in the bad-outcome scenario, yes, the country would be in recession. We certainly hope that this bad-outcome scenario will only be a scenario and will not become reality.”
Lagarde will head shortly to the G20 finance ministers meeting in China, where she said she will urge the world’s richest countries to implement the “right policies” so that “the 1.3 billion people living in low-income countries developing countries will have greater opportunities than ever before to benefit from, and contribute to, the global economy. It’s not just good news for them, it’s also good news for the other six billion inhabitants of the planet, because they will all benefit from this.”
Globalization of the economic sort is often maligned. But then there is globalism: of norms, values, culture, and attitudes. Are norms and values, even “culture,” being globalized? Is the idea, for example, that women have equal rights, as in the Sustainable Development Goals (SDGs), gaining ground as a universal norm? And might changing norms and values affect legal regimes and behavior (sometimes, maybe)?
The charts below show the results of questions posed to men and women in the (nationally representative) Demographic and Health Surveys starting in the early 2000s, which asked about what circumstances respondents believe might justify a husband beating his wife: when the wife burns the food? Argues with her husband? Goes out without telling him? Neglects the children? Refuses to have sex with him? Is too tired?
The first set of charts indicates the percentage of urban women interviewed who agreed that one or more of the reasons posed justifies wife-beating, for each of five regions and separately for Anglophone and francophone Africa. (We include only countries in which the questions were posed in at least two years. For rural women, the percentages are slightly higher and the trends very much the same, country by country.)
Figure 1. Percentage of respondents who agreed that one or more reasons justify wife-beating by husband.
In many countries surveyed, the absolute percentages of women are disturbingly high—except in Peru and Colombia, both upper middle income countries of Latin America where less than 5 percent of women see some justification for wife-beating. For the most recent survey years in other countries outside Latin America, levels range between 9.5 percent (the Philippines) and 89.5 percent (Guinea). In India and Bangladesh, it is hard to see a “good” downward trend from relatively high levels (see the chapter on meta-preference for sons in this latest economic report on the Indian economy). On the other hand, the trend is downward in Egypt and Jordan, in many countries of francophone Africa, and in most countries of Anglophone Africa.
There are anomalies (why is the percentage rising in Cambodia and Indonesia, while falling to a low level in low-income Benin? (Is it Benin’s democracy?) Why so high in Guinea (recent war? Ebola?) and why is it failing to fall in Sierra Leone (Ebola?), but falling in Liberia (Africa’s first female president for a decade?) Why is the percentage lower and more likely to be falling in Anglophone compared to francophone Africa? Is the difference real—something about colonial history or “culture”—or were the relevant questions framed or understood differently?
The next chart illustrates the difference between the percentage of urban women and men who said that there are one or more justifications for wife-beating (in the most recent year for each country and including countries with only one survey year with these questions). Except in the Dominican Republic, Colombia, Mozambique, Lesotho, and Kenya, the percentage of men who endorse at least one reason is lower. Why? Perhaps because some wives who are survivors of partner violence suffer confirmation bias. Perhaps men more than women try to answer the way they assume they ought to? (See Rachel Glennerster on the challenge of attitude and other questions meant to measure women’s agency or empowerment.)
Figure 2. Percentage of respondents who agreed that one or more reasons justify wife-beating by husband.
These questions, and additional ones on domestic violence, were only introduced into the DHS after the turn of the century. Why then? In 1979, the UN General Assembly adopted the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW)—and there is evidence of a subsequent positive and statistically robust (though uneven across countries) “CEDAW Effect” on women’s rights around the world. The Beijing Women's Conference (more formally known as The Fourth World Conference on Women: Action for Equality, Development, and Peace) was in 1995. Did global “jawing” in the late 20th century help inspire, with some lag, the introduction of these questions into the DHS system?
The questions are about attitudes, not behavior. But surely in the long run attitudes matter. Might the universal values reflected in CEDAW, discussed in Beijing, and codified in the Sustainable Development Goals explain some of the downward trend the charts show in many countries? Is recent news of sexual assaults on women—in Delhi on a public bus, by UN peacekeepers in the Congo, in Hollywood, USA—a sign that at the global level the norm is changing? Let us hope there is in fact a phenomenon we could call globalism of norms, and that changing norms are changing behavior. That would mean that sometimes-maligned globalism has been good for women in the most intimate and private part of their lives—and thus good for all of us.
I was recently invited to participate in a panel discussion, titled “Artificial Intelligence and the Future of Human Labor” at the 10th edition of World Policy Conference. Preparing for this panel provided me with an opportunity to think more deeply about the ways in which artificial intelligence (AI) and automation will impact the future of work. And I came to five main conclusions.
Change is coming ready or not
Technological progress and the advancement of AI and automation will have a major impact on the nature of work in the coming decade. We are all familiar with the transport revolution where self-driving cars are now a question of “when” not “whether.” But we need to recognize that AI, robotics, 3D printing, and big data will change the nature of many different types of jobs in ways that we can already anticipate and in ways that we cannot even imagine today. And coping with this kind of widespread and rapid change—notwithstanding the gains it will bring—will raise difficult societal challenges that few countries are prepared to address.
The optimists, on the other hand, maintain that while many occupations could in theory be impacted, the actual pace of introducing new technologies into the work place will be more gradual, that in some cases robotic technology might turn out to be more expensive than traditional production methods. Thus, low paid garment workers in Bangladesh or Cambodia may simply be pressured to keep working at low wages if they want to avoid losing their jobs to robots. They also point out that it is “activities” that can be automated not “occupations.” This is certainly true but it still means that many occupations will be transformed because the activities that comprise them will be eliminated or radically changed. Finally, they point out that historically societies have been able to adapt to—and gain from—various waves of technological change and this time will prove no different. Unquestionably, the quality of life today for the vast majority of human beings is better than for our predecessors of a hundred years ago because of technology. And all along, there were people whose worries about the disruptive impact of technology proved exaggerated.
I believe that—as (almost) always—the likely outcome will be somewhere in between but the more important point is that even a slower pace of introduction of new technologies will still far outstrip the capacity of many societies to absorb the change. No one is seriously arguing that the pace of digital technological innovation over the coming twenty years will be slower than in the past two decades and it is now widely accepted that the way in which we have managed the political and social consequences of technological change in this recent past has been far from satisfactory. Therefore, it is important not to argue about the potential magnitude of the impact and instead to anticipate possible challenges that technology will create for human workers and ways in which the development community can help mitigate negative outcomes.
And not just in advanced economies
Discussions surrounding AI, automation, and the future of work tend to focus on the ways in which technological progress is affecting advanced economies. It is important to recognize, however, that the impact of new technology will be equally important for workers in developing countries. For example, Adidas employs about a million people, mostly in factories in Asia and Africa, to make about 300 million pairs of shoes every year. Last year they opened a “speed-factory” in Germany, that aims to make 500,000 pairs of shoes a year, with only 160 production jobs for human workers. The remaining jobs within the factory are automated and done by machines. Another example: FoxConn (the firm that produces Apple and Samsung products in China’s Jiangsu province) recently replaced 60,000 Chinese factory workers with industrial robots. In China as a whole, factories are projected to have more than 400,000 industrial robots installed by 2018, the highest number of any country in the world. And the jobs that will be impacted range far beyond manufacturing—many activities in agriculture, in services, and in government could be radically changed through the application of new technologies.
Policy discussions about the ways in which governments can be prepared for the radical changes in human labor that are coming must, therefore, include ways to limit negative impacts in developing countries. This includes rethinking the basic model of development pathways whereby surplus labor shed from agriculture is absorbed in simple manufacturing which raises both living standards and productivity. Technological progress that displaces workers could diminish the cost competitiveness of emerging economies that has, until now, driven their growth especially if these economies do not use new technologies to increase productivity. As manufacturing becomes increasingly automated, emerging economies will need to find strategies to decrease their dependence on manufacturing exports to boost growth. These strategies will obviously vary by country due to differences in resources, policies, and infrastructure capabilities.
New technology requires new skills
Historically we have seen that after a technological revolution, new and better jobs are created after the initial displacement of workers but that these workers need new skills to adapt to these new jobs. The need for new skills is even more critical today because of the pace and breadth of technological change. However, while many agree that our current education system is not teaching our children the skills they will need, we are not as confident about what precise skills tomorrow’s workers will need or how best to ensure that they acquire them. Continual skills training and life-long learning could help workers gain necessary skills to keep up with the changes in activities required within a job due to automation and AI. Education efforts could also help some workers shift from easily automatable jobs into less automatable jobs such as those in healthcare or childcare. However, the vast majority of workers in developing countries have no more than a high school education and it is not evident that they could be easily retrained for the skill set needed for the new economy. Nor is it clear how governments would pay for this retraining or incentivize companies to bear the costs of retraining.
Beyond jobs to relationships
AI and disruptive technologies will impact not just the nature of work but also the relationship that workers have with their employers, with colleagues, and with the state. Legal systems are already grappling with the question of whether an Uber driver is a “worker” in the traditional sense. A larger question is how to provide security of work and income to the potentially large share of the workforce that will work in the gig economy. One idea is to adopt a universal basic income (UBI) to insulate workers, whose jobs were replaced or changed by disruptive technologies, from poverty. Additionally, a UBI could enhance the ability and security for workers looking for better jobs or entrepreneurial opportunities. And a universal basic income could spur innovation and encourage people to take entrepreneurial risks because of the safety it provides. However, there are basic issues of affordability and regressiveness that need to be addressed before this idea can be applied on any large scale. There are also issues of how healthcare, pensions, and professional skills development will need to be modified in a world with many more individual contractors. This is of course more complicated in developing countries where financial resources are limited and institutional capacity is underdeveloped.
Don’t underestimate the politics
Finally, we need to recognize that this new era of technological revolution will be political as much as economic. With the rise of automation there will be winners and losers and redistribution will be necessary to compensate the losers and a failure to do so can have enormous political consequences. In the United States and Europe, a failure to adequately compensate the losers of globalization and technological change has helped lead to a rise of populism which is changing the political landscape.
Change is here. While we may not know how large this change will be or what the effects this technological revolution will have on human labor in five, ten, or twenty years, it is highly likely that the scope and magnitude of change will require considerable societal adaptation and that this process will need extensive preparation and discussion. We need to start thinking now about different development approaches that can help mitigate the negative impacts of the technological revolution in both advanced and developing countries.
Today, we published this year’s Commitment to Development Index (CDI), which ranks 27 of the world’s richest countries in how well their policies help to spread global prosperity to the developing world.
We will be presenting the Index and our recommendations at the high-level period of the UN General Assembly (UNGA) later this month. As political leaders prepare to meet for UNGA, here are some key takeaways from our research that should help guide their policies and discussions.
1. Leadership on global development isn’t only for the richest!
The CDI analyzes the policies of 27 of the world’s richest countries in seven key areas: aid, finance, technology, environment, trade, security, and migration. The indicators adjust for size and economic prosperity—and the results demonstrate that country wealth does not determine the results. The wealthiest countries—represented by the G7—rank anywhere between fourth and twenty-sixth. Income per person averages half that of the United States in Visegrád countries (Czech Republic, Hungary, Poland, and the Slovak Republic), but all four now rank higher in their commitment to development. Portugal, who ranks sixth, performs well in most components despite being less prosperous than many of the CDI countries. Smart policy design is not a matter of prosperity only. Therefore, our first key message to all the leaders of the 27 CDI-countries:
Domestic economic challenges needn’t prevent leadership on smart policies to increase global prosperity.
2. Development is about much more than aid
The CDI draws attention to the fact that global development is about so much more than the amount or quality of foreign development assistance provided. Policymaking in various policy fields directly affect the lives of poor people around the globe.
For example, the design of our policies on technology or finance affect the prospect for people living in poorer countries. Both research and development policies and investment policies are mainly pursued for domestic goals. However, they have a lasting effect on developing countries. Smart intellectual property rights can enable knowledge sharing and technology transfer. Also, bilateral investment agreements with developing countries recognising specific public policy goals such as labour rights, environmental standards, or human rights can have an important effect on the prospect for development.
The commitment to implementing balanced and sustainable policies domestically also sends a strong signal about their importance globally and irrespective of countries borders. Money spent on foreign development assistance does not have the same lasting effect if countries don’t recognise the international impact of their actions in other policy areas. Therefore:
In our integrated world, your policies and decisions as a leader of a rich country have an important bearing on the lives of people in developing nations.
3. Even the bottom-ranked country has smart policies we all can learn from
Like the Sustainable Development Goals (SDGs), the CDI recognizes development has many angles. But while the SDGs cover all nations and their outcomes, the CDI concentrates on the richest countries and emphasizes how policies can make a huge difference to development globally. The fact that we limit our evaluation to high income countries means that policy recommendations are more tailored and relevant. Even the best-ranked countries have weaknesses where they can learn from their peers. Overall leader Denmark performs weaker on migration and could learn from the migration policy designs from countries as varied as Luxembourg, New Zealand, or neighbouring Sweden. Similarly, bottom-ranked South Korea could advise all other 26 CDI countries on how to build long-lasting support for research and development. Accordingly:
Use the CDI as a tool to learn from others and to inspire change through your own best-practice policies.
4. Some overall progress on the Environment component but stronger commitments are needed
Tragically, Hurricane Harvey has reminded the United States how vulnerable we all are when natural disasters hit. Further, people in South Asia were left suffering after massive flooding and devastation affected millions, while earlier this year we saw how the unprecedented drought in Africa affected the lives of millions facing malnutrition. These tragic events, sadly far from unique, remind us that we all need to do more to combat climate change.
This year’s CDI points out that progress has been made—CDI countries report progress in curbing new greenhouse gas emissions and the amount of Ozone-depleting substances has been cut significantly. However, many environmental challenges remain. We need to see an even bigger commitment to development from the CDI countries in the future, such as a complete support for the Paris Agreement and the willingness to tackle issues such as overfishing and deforestation. Thus, our final recommendation:
While progress has been made, many global challenges remain. We ask this generation of world leaders to strengthen and deepen their commitment to development.
These findings show that we and our governments can do so much more to spread prosperity to poorer countries. The CDI serves as a useful tool to identify which national policies still have potential to be designed in a more development friendly way. We hope world leaders use the opportunity of UNGA to discuss ways to make further progress in all policy fields, inspiring each other to achieve more on global development.
What are the economic, political, and technological risks to future global growth and stability? This complex question was the topic of a recent CGD event, which featured a conversation between IMF's managing director Christine Lagarde and CGD’s president Masood Ahmed. This week's podcast is an edited version of their conversation.
The event took place just as the IMF revealed its latest World Economic Outlook. Its forecast for annual global growth in the coming years is relatively unchanged at around 3.5 percent—but what has changed, Lagarde said, is the “source and balancing of growth” around the world, with an upgrading of forecasts for Asia, Continental Europe and Canada, but lower projections for the US and UK. The picture for Sub-Saharan Africa is also cause for concern, as Lagarde and Ahmed discussed during the event.
They also talked about ways to address the concerns of people who have been “left behind” by development progress. For the Lagarde, that means “number one, telling the truth about what the likely consequences are of certain policies. … You have to start with that, and then allocate the resources and decide the policies that will actually help.”
Check out the podcast at the top of this page, and watch the full event on our website.