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.
Categories
- A. Upside of Down (1)
- B. Getting Better (2)
- C. Life Liberty and the Pursuit of Utility (11)
- D. Overselling the Web? (8)
- E. Economic Development (223)
- F. Globalization (159)
- G. Corruption and Transparency (44)
- H. Global Health (59)
- I. Happiness (30)
- J. Internet and ICTs (43)
- K. Gender (29)
- L. Education (20)
- M. National Security (32)
- N. Inequality (60)
- O. Environment (26)
- P. Other Topics (49)
- Q. Academic writing (125)
- R. Columns and general writing (400)
- S. Speaking (2)
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.
Scenarios for Future Global Growth to 2050
A CGD Working Paper with Zack Gehan. We develop scenarios for the shape of the global economy in 2050 building on a simple regression of the historic relationship between current income and lagged income, demographic features, climate, and education, using the coefficients to develop a “central” forecast and error terms to set high and low bounds on country outcomes. Scenarios examine combinations of low and high outcomes for different country groupings. “Central” forecasts suggest slowing per capita growth rates for high income countries as well as many upper middle income countries including China, with continued global income convergence. Scenario exercises suggest the potential for considerable variation in outcomes including global share of the economy and voting power in international institutions..
The Ultimate Resource is Peaking
A CGD Working Paper. Julian Simon argued that more people were associated with more prosperity: human talents were the “ultimate resource” and the force behind rising living standards. The last 30 years have been consistent with that view. But, globally, we are making fewer workers—and, more importantly, fewer potential innovators. In rich countries, human capital is growing considerably more slowly than in the past. Meanwhile innovation per researcher appears to be dropping as the population of researchers ages, while it takes longer to get to the knowledge frontier and more collaboration to expand it. Combined with the fact we are increasingly intolerant of risk and increasingly desirous of innovations in sectors where it is particularly hard to increase productivity, it is little surprise that productivity growth is indeed declining. To extend our two-century era of comparatively rapid progress, we need radically reduced discrimination in the global opportunity to innovate.
The Water Wars That Weren't
Technology and trade can ensure water scarcity is not a constraint on progress. In PERC Reports.
Climate Change May Have Only Small Effects on Long-Run Global GDP. So What?
A CGD note. The long run global estimates of climate impact on GDP are small. That hides the fact that there are big volatility shocks and impacts are concentrated in poorer countries. And that matters a lot for policy response.
The Simple Math of Development Finance
A CGD Note. In short: we want lots of investment in developing countries; it has to be financially sustainable; direct private project investment is very expensive, indirect private finance through multilateral development banks is a lot cheaper; so scaling through WB/AfDB/ADB/IADB is the sustainable (affordable) model.
America Shouldn’t Copy China’s Belt and Road Initiative
A co-authored Foreign Affairs piece with Scott Morris. The US should leave infrastructure to the World Bank and 'compete' bilaterally with China on human rather than physical capital.
Can Africa Help Europe Avoid Its Looming Aging Crisis?
A CGD working paper with George Yang. There will be 95 million fewer working-age people in Europe in 2050 than in 2015, under business as usual. This will cause significant fiscal stress as well as slower economic growth. Potential responses include: (a) raising labor force participation by women and older workers; (b) automation; and (c) outsourcing. But none will be sufficient. This leaves immigration: while migrants create demand for jobs as well as fill them, they can help rebalance the ratio of working to non-working populations. The paper compares business as usual estimates of inflows to 2050 with the size of the labor gap in Europe. Under plausible estimates, business as usual will fill one-third of the labor gap. This suggests a need for an urgent shift if Europe is to avoid an aging crisis. Africa is the obvious source of immigrants, to mutual benefit. Here's a short video presenting the paper.
Your World, Better
Your World, Better: Global Progress and What You Can Do About It is a book written for the smart and engaged middle school student. It looks at how America and the World has changed since the reader's parents and grandparents were young: what has happened to health and wealth, homes, school and work, rights and democracy, war and the environment, happiness and depression. It talks about the things that have gotten better, the sometimes-intensifying challenges that remain, and what readers can do about them.
Your World Better is optimistic, but it doesn’t shy away from the considerable problems we face: from inequality through discrimination and depression to climate change and infectious threats. It is meant to encourage kids to help make the world better themselves: tip them from a sense of powerlessness toward action, not into complacency.
The pdf of Your World Better is available to download here for free. Or you can buy a kindle version for 99 cents or a hard copy for $8.10 on Amazon (or six pounds on UK Amazon here). Any author royalties from those sales will be donated to UNICEF (so far, a bit more than $800 has been donated, thanks!). I talk about the book to Marian Tupy for the Human Progress podcast and to two (fantastic) middle schoolers for NPR. Then I did a Slack chat with five middle schoolers for Slate. A CGD discussion about the book and talking to children about progress is here. And here's a fifteen minute video about the book (or try it on Youtube). I am happy for the *text* (not pictures) to be copied or redistributed in any medium, and/or remixed or transformed for any purpose, with attribution.
"Everyone, no matter how old, or how young, should read this. I’m sending to grandkids and their parents." --Nancy Birdsall
"Great read for middle school kids who want to understand how the world is getting better -- and can become even more so!" --Parag Khanna
"How can you pass up a free book?! And one that is so relevant for today? If you know a middle school student or teacher, pass this along! Incredibly fresh and honest." --Karen Schulte
"Kids are taught that everything's getting worse and we're all doomed--factually incorrect, and a message that leads to cynicism & fatalism, not constructive action. An antidote: Charles Kenny's new Your World, Better..." --Steven Pinker
What Is the Role of Aid in Middle-Income Countries?
A CGD policy paper with Ranil Dissanayake and Mark PlantWe develop screens and principles designed to maximise the impact of aid, especially in richer recipients. All else equal, a dollar spent in the poorest countries will have a larger impact on well-being than a dollar spent in richer countries, so ODA should be concentrated in those countries. But where it is used in middle-income countries, it should be aimed at (i) a major development challenge; (ii) where relatively small amounts of finance can be expected to have a significant return; and (iii) consistent with the political economy of the recipient country or that is likely to induce a shift in the political economy. That implies aid should focus on severe challenges faced by geographic or demographic sub-groups; using a range of tools beyond grants; with the goal of bringing forward, rather than replacing, state capacity; and using multilateral approaches wherever possible. An examination of aid practice suggests it is considerably at odds with what this approach would suggest.
The U.S. has always been — and always will be — a nation of nations
On the fact we're a nation of immigrants worried about immigration. In the Dallas Morning News.
The Real Immigration Crisis
For Foreign Affairs. The next several decades will see populations in Europe and North America age and shrink as people have fewer and fewer children. That trend will hurt economic growth and dynamism and leave too few workers for every retiree. Robots and artificial intelligence will not save rich countries from the economic consequences of a shrinking population. Nor, without a dramatic reversal of current policies toward immigrants, will a flow of workers from elsewhere. To avoid sclerosis and decline, the rich world will have to compete to attract immigrants, not turn them away.
Can the US Development Finance Corporation Compete?
A CGD Policy Paper. The new US International Development Finance Corporation (USDFC) will be considerably larger than its predecessor, and it will also be more focused on low and lower middle income countries. It will have new tools to deliver but face expanded competition. The major challenge to the DFC is not Chinese investment (which largely funds projects ill-suited to support from the DFC), but other development finance institutions, many of which are deploying increasing quantities of subsidized capital to attract project sponsors. It is not clear that there are sufficient suitable deals in the shrinking set of low and lower-middle income countries to absorb DFI development finance, and the USDFC could lose projects to subsidized finance from elsewhere if this turns out to be the case. Given that, it should be a priority for the United States to agree rules with other donors that prevent development finance institutions from competing on the basis of subsidy. The new DFC needs increased capacity to deliver deals: both the tools provided by the BUILD Act which are being constrained by the administration and the staff and budget to actively build a pipeline of projects. A considerably bolstered administrative budget may involve reducing –potentially to zero—the profitability OPIC traditionally enjoyed.
Five Principles for Use of Aid in Subsidies to the Private Sector
A policy paper for CGD. There is a significant and ongoing ramp-up in support for explicitly subsidized official development finance to the private sector around the world, but its role remains poorly defined. Lessons from the aid effectiveness literature as a whole and principles on effective use of aid suggest the need for approaches that do not merely finance the marginal private investment. Regarding experience of government intervention in markets, subsidies are only one of many options to incentivize the private sector, and bespoke subsidies provided by outside actors are rarely likely to be the most efficient form. This paper discusses where outside subsidy of the private sector may make sense and develops principles for the use of aid in subsidies based on that analysis. Subsidies should be allocated on the basis of necessity in meeting public policy goals; the norm for subsidy allocations should be competitive approaches or open offers; non-competitive subsidies should only support market making; subsidy levels should be capped; and subsidy levels should be transparent. Much of the content of these “new” principles is already implied or specified by the existing Multilateral Development Bank Principles to Support Sustainable Private Sector Operations, but they suggest that development finance institutions should not use their standard business model when using subsidies.
How immigration-law enforcement can affect high-skilled American women
Undocumented immigrants provide a lot of child care. If they aren't around, it is harder for working mothers. For The Economist.
The Trump administration is driving up citizenship applications
Scare people that they may not be able to apply for citizenship later, they will apply for citizenship now. Me in the Economist.
Bank of America
The U.S. shouldn’t get to pick the head of the World Bank. And not just because Trump is president. Me in Slate.
The Bogus Backlash to Globalization
Resentful Nativists Oppose Free Trade and Immigration—Don’t Appease Them. Me in Foreign Affairs.
America’s fertility rate continues its deep decline
I you want more babies, let in more women and help them work. For the Economist.
What Should Silicon Valley Companies With Saudi Money Do?
Discussing Anand Giridharadas' idea for a boycott on accepting Saudi investment money, in Slate.
Trade and immigration have never been so popular in America
Trump is in a shrinking minority. For the Economist.
Immigrants and the wage gap
For the Economist. Slowing wage convergence between migrants and natives isn't driven by lower skills as much as by native discrimination.
The Trump administration wants to expand immigrant family detention
Family detention centers are harsh and unnecessary. For the Economist.
Why America needs more immigrants
Because the old, white, aging (temporary) majority isn't having kids... for the Economist.
Speeding Sustainable Development: Integrating Economic, Social, and Environmental Development
A CGD Working Paper on policy coordination to help meet the SDGs. TLDR: Important, but hard.
This paper discusses the role for policy integration to speed progress towards delivering the Sustainable Development Goals (SDGs). This is required because the goals set very ambitious targets for progress across a range of interlinked areas, encompassing both synergies and tradeoffs. Lessons of policy integration at the national level suggest that it is usually at best partially successful, requiring significant commitment from the highest levels of government. Policy integration regarding foreign affairs has proven even more challenging. This paper suggests a mechanism for prioritizing coordination and the use of coordination tools including regulation, safeguards, taxes, and subsidies. It also suggests re-orienting ministerial responsibilities where possible from input control to achievement of outcomes as well as tools to promote innovation by subnational governments and the private sector.
Two Reviews of Books on Progress
A review of Steven Pinker's Enlightenment Now for The Democracy Journal: Its Not as Bad as All That.
And a review of Gregg Easterbrook's It’s Better Than It Looks for The Washington Monthly: Dear Democrats, Don’t Despair.
Why Donald Trump’s wall won’t keep heroin out of America
Trump's wall: transparently stupid. For the Economist.
The Rumors [of the Death of Liberalism] Have Been Exaggerated
A review of The Retreat of Western Liberalism by Edward Luce and The Fate of the West: The Battle to Save the World’s Most Successful Political Idea by Bill Emmott, for Democracy: A Journal of Ideas.
Trump's Flawed Global Vision
For US News and World Report --the world is getting more peaceful and collaboration is increasingly important to US and global well-being.
The data are in: Young people are increasingly less racist than old people
For Quartz --the world is slowly getting less racist.
The Kushners put controversial investor visas in the spotlight
How to reform the the EB-5 immigrant investor programme. For the Economist.
Seven Habits of Successful Nations
A review of Jonathan Tepperman's book The Fix: How Nations Survive and Thrive in a World in Decline, for Washington Monthly.
A US Law or Executive Order to Combat Gender Apartheid at Work in Discriminatory Countries
A policy memo for CGD on a law to help US multinationals combat inequality in the workplace overseas.
A number of countries worldwide have laws that specifically discriminate against women’s participation in the workforce, including bans on particular occupations, restrictions on opening bank accounts or taking jobs without a male family member’s authority, and restrictions on travel. Such discriminatory laws are associated with considerably lower female labor force participation and with negative consequences for economic growth and sustainable development. They also contradict globally accepted norms and values on gender equality in the workplace. The US legislation or executive action we propose would encourage US multinationals to mitigate the impact of local discriminatory legislation to the extent possible within the host country’s domestic laws by following a code of conduct regarding women’s employment, potentially limiting that obligation to the most discriminatory of countries. The proposed legislation is modeled on US anti-apartheid legislation (P.L. 99-440) that encouraged US firms to hire, train, and promote nonwhites in South Africa in the 1980s. Part of the legislation addresses the actions of the executive branch; this could also form a stand-alone executive order.
2015: The Best Year in History for the Average Human Being
(Still) getting better. For the Atlantic.
Saudi Arabia is Underwriting Terrorism Let's Start Making it Pay
A call for smart sanctions on the House of Saud based on its extremism at home and abroad. For Politico.
Paul Ryan's Exclusionary Take on the American Idea
Paul Ryan only cares about one third of the American idea that condition of birth shouldn't determine outcomes --me in The Atlantic.
Immigrants to the Rescue
For Businessweek: with declining birth rates, rich countries need foreigners.