Not counted: Nigeria’s GDP model is based on the year 1990. (Photo: Wayan Vota)
In 2014, one small policy tweak will grow Nigeria’s economy by 40 percent, causing it to overtake South Africa as the largest in the region. A similar change in Ghana caused that country’s economy to grow 60 percent, while in Guinea-Bissau and Gambia the economy doubled in size. Even the United States increased its output by 3.6 percent using the same technique. What happened?
GDP rebasing. Simply put, these countries are all changing the way they measure their Gross Domestic Product — the sum total of all economic activity in a country in a given year — to better reflect what’s really happening the economy.
When Nigeria’s rebasing is complete, it won’t mean the country is actually producing 40 percent more goods and services. Living standards won’t jump by 40 percent — the government will just be counting more accurately. But it’s still hugely important.
by Laura Boyette and Teodora Mihaylova
How effective is the current global development agenda? What needs to be done differently going forward? How can we set goals that are more attainable and sustainable?
In 2000, at the dawn of a new millennium, the United Nations laid out an ambitious global development agenda known as the Millennium Development Goals (MDGs), which seeks to resolve some of the most pressing international challenges of our time: eradicating extreme poverty and hunger, achieving universal primary education, promoting gender equality, improving maternal health, reducing child mortality and promoting environmental sustainability, among others. Happily, the world has made some exciting progress toward achieving these goals.
The MDGs will expire on December 31, 2015 and a new set of principles will replace them. In order to face these new challenges, the United Nations once again created a panel to debate the needs that face our world post-2015. In May of 2013, the panel released their report.
At a recent talk at Georgetown University, Chair of the Center for American Progress John Podesta argued that five fundamental shifts have taken place since the inception of the current standards in 2000.
Sergio Daga was part of the CIPE-Atlas Corps Think Tank LINKS Fellowship, and served at the Heritage Foundation.
Countries trade with each other because trading typically makes a country better off. In international trade competition occurs at the firm level, while citizens of every country can benefit from free trade. Citizens enjoy a greater variety of goods and services, and generally at a lower cost.
Imagine a country that decides to isolate itself economically from the rest of the world. In order to survive, the citizens of this country would need to grow their own food, make their own clothes and build their own houses. However, if this country decided to open its border to trade, its citizens would specialize in the activities they do best. Specialization leads to higher productivity, higher income, and better living standards.
Can every country benefit from free trade? A fundamental principle of economics – comparative advantage – holds that when a country produces more of one product, it will create less of some other product. This trade-off occurs because resources are scarce and societies want to get the maximum benefit from them.
The United Nations recently published a report of the High-Level Panel on the post-2015 development agenda. The 27-member panel is composed of leaders from civil society, the private sector, and government – including Betty Maina, the Chief Executive of the Kenya Association of Manufacturers (KAM), one of the country’s leading business associations and a long-time CIPE partner.
The panel’s finding were based on extensive consultations with more than 5,000 civil society organizations in about 120 countries and CEOs of 250 companies in 30 countries with annual revenues exceeding $8 trillion, as well as academics from developed and developing countries, international and local NGOs, and parliamentarians.
The report concludes that the post-2015 agenda for the international community to agree upon before the expiry of the Millennium Development Goals (MDGs) needs to be driven by five big, transformative shifts:
- Leave No One Behind
- Put Sustainable Development at the Core
- Transform Economies for Jobs and Inclusive Growth
- Build Peace and Effective, Open and Accountable Public Institutions
- Forge a new Global Partnership
In a recent blog post, Karol Boudreaux, Director for Investments at the Omidyar Network, references this report and rightfully notes that property rights are key to achieving MDGs – in particular the first two: ending poverty and empowering girls and women – and therefore crucial to the success of these larger post-2015 goals as well. She says, “new attention is focused on encouraging bottom-up, participatory efforts that recognize and formalize the legitimate rights that individuals (including women and girls), communities and businesses hold to a variety of resources.” That matters tremendously because the poor – both informal urban entrepreneurs and small farmers – are the largest group of business people in the world.
One of the most famous opening lines in all of literature comes from the great Russian novel Anna Karenina: “Happy families are all alike; each unhappy family is unhappy in its own way.” With that, Tolstoy encapsulates a simple truth: dysfunction takes myriad forms. That’s not to say that one cannot learn from another’s experience. Indeed, some of the most important lessons can come from those who have already tried and failed. Experience is singular, but patterns can illuminate.
It is in that same spirit that Boris Begović writes the latest Economic Reform Feature Service article, which offers Serbia’s lessons in democratic transition to countries currently in flux. Dr. Begović, a longtime CIPE partner who was a chief economic adviser to the federal government of the Federal Republic of Yugoslavia for 15 months during 2000-2002, examines the approaches that worked for Serbia—and those that didn’t. Read the full text of The Serbian Experience in Transition.
It is easy to be pessimistic about the effectiveness of traditional international development efforts. After decades of effort and hundreds of billions of dollars, too many people around the world live in poverty, suffer from disease, and lack the economic, social, and political opportunities that those of us in developed countries enjoy.
Stephen Radelet, former chief economist for USAID and author of the book Emerging Africa: How 17 Countries are Leading the Way, tells a very different story: we are living in a great era of global development.
At a recent talk at Georgetown University, Radelet argued persuasively that “there has never been a time when there has been such income growth and economic growth in low-income countries,” where the standard of living has tripled since 1960. The growth has been even more dramatic since the turn of the 21st century: in the last 15 years, the number of people in absolute poverty has fallen by 1/3. Health outcomes have also improved — infant mortality, while still far too high, has dropped substantially, even in the poorest and worst-governed countries.
This growth has been more broad-based than is typically recognized. While economic reforms in China and India are responsible for lifting hundreds of millions of people out of poverty, broad-based economic growth has had significant impacts throughout Asia, Latin America, and even Sub-Saharan Africa. Radelet suggests that this economic shift towards prosperity for ever more of the world’s citizens could have more impact on human society than even the Industrial Revolution.
A Malaria Consortium vendor sells bed nets in Mozambique. (Photo: DFID)
In a recent blog post, my colleague Molly Brister investigates the rise of social entrepreneurship, which she rightly characterizes as a phenomenon whereby local actors are able to achieve development goals or address social and economic issues when “the government may not have the capacity or ability to do so.” Having recognized the power of social entrepreneurship, many donors are eager to provide needed resources, whether financial or technical, to further these initiatives. Indeed, supporting social entrepreneurship is an attractive area for companies seeking to maximize the impact of their corporate social responsibility (CSR) dollars, as mentioned by Anna Nadgrodkiewicz in her piece on recent trends in CSR.
But in analyzing the social entrepreneurship landscape, one quickly sees that the term means different things to different groups. As Brister points out throughout her blog, the players here include “for-profit companies, nonprofits and NGOs, or even… existing resources… in government.” The landscape can be difficult to navigate, with overlapping understandings that can be difficult to unpack. To keep the conversation going, I propose a small taxonomy of social enterprise and social entrepreneurship.