Charles Kenny

The Future of Global Development and Implications for Aid

A speech at the Oxford Martin School. Richer countries are rapidly ageing and productivity is stagnating. Meanwhile, industry - the motor for rapid economic development in the past - employs ever fewer people worldwide. And yet there is still hope for greater, and shared, global prosperity. Declining working age populations in rich countries are demanding ever-more services. A rising, increasingly educated working age population in lower income economies can provide them. This is an immense, mutually beneficial opportunity to create a new development model, and a new model for development assistance. Aid for economic growth traditionally tried to foster the expansion of export-oriented industrial employment in recipient countries through physical investment. In the future, it can foster the expansion of expatriate employment through skills partnerships.

The Future of Official Aid Flows

A CGD Working Paper with Zack Gehan. In absolute dollar amounts official development assistance (ODA) reached an all-time high in 2021. But as a percentage of recipient country GDP, aid (and broader public investment) flows have been declining for some time. This paper looks at the scale of ODA and official financial flows (including multilateral flows) in comparison to donor and recipient GDP, and suggests some scenarios for the range of flows going forward, as well as examining the potential share of resources taken by climate finance. It concludes that there is a non-trivial chance that ODA for non-humanitarian and climate finance falls in absolute terms over the coming years and that aid becomes increasingly focused on richer countries. In terms of increasing aid available, the most promising strategy for bilateral ODA flows may be to increase the generosity of traditional donors but for broader finance for international development, and particularly multilateral finance, increasing the range of donors may have a larger payoff. This will be necessary, because demand for multilateral finance is likely to rise.

Is Manufacturing Destiny? On the Dynamics of Future Sectoral Shares and Development

A CGD Working Paper with  Brian Webster and Ranil Dissanayake. We develop a simple empirical model of sector employment and output shares which, coupled with long-term projections of GDP per capita, provide indicative projections of the evolution and peak of manufacturing in lower income countries to 2050. These indicative projections suggest that cross-country income convergence will continue despite manufacturing peaking as a share of output. This forecast might seem implausible: countries have historically developed and become rich by shifting the composition of their production into manufacturing (and eventually out of manufacturing and into services). But we argue there is reason to think that this is a realistic possibility. First, we argue that there is the potential for a significant relocation of the global manufacturing base in the next two decades that are not fully captured in forecast estimates. Second, notwithstanding this potential relocation, we argue that the role of manufacturing as the unique path to prosperity has likely been overstated. We make the case for cautious, conditional optimism.